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spk00: Ladies and gentlemen, thank you for standing by, and welcome to QUMU Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to introduce your host, QUMU's Chief Financial Officer, Mr. Dave Risto. Sir, you may begin.
spk04: Thank you, Paul. And good afternoon, everyone. After the market closed today, Kumu issued a press release announcing its fiscal results for the fourth quarter and full year ended December 31st, 2020, a copy of which is available on the investor relations section of the company's website. Our financial results are consistent with the preliminary fourth quarter and 2020 fiscal year end results. We issued on January 25th of 2021. During today's call, we will make certain statements with respect to the company's expected financial results, the impact of COVID-19 on the use and adoption of video in the enterprise, the company's go-to-market strategy, and efforts designed to increase the company's traction and penetration with customers. These statements are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect management's opinions only as of the date of this call, and the company undertakes 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 CUMU's SEC filings, specifically its Form 10-K and 10-Q and financial results press release, for a more detailed description of the risk factors that may affect the company's results. During the call today, management will discuss adjusted EBITDA, a non-GAAP financial measure. In the company's press release and filings with the SEC, both of which are posted on the company's website, you will find additional disclosures related to this non-GAAP measure, 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. the company encourages you to consider all measures when analyzing its performance. I would like to remind everybody that this call is being recorded, and it will be made available for replay via a link available on the investor relations section of Kumu's website. For those of you who are already not aware, the company released a fully redesigned investor relations website late last year, making it easier to stay informed about all investor relations activities and news events at Kumu. Among the new features of the website is an upgraded email notification system that provides subscribers with real-time press releases and SEC filing notifications. If you're interested in following our progress in a more user-friendly manner, I encourage you to go to our website at ir.kumu.com to sign up for the alerts. You'll have the option to receive press releases as well as annual and quarterly reports, insider transactions, and proxy information. On the call with me today is our president and CEO, T.J. Kennedy. After I review the financial results for the fourth quarter and full year, TJ will discuss our operational progress within the context of our strategic roadmap. Afterwards, he will provide some color around our business and the financial outlook for 2021. So at a high level, our financial performance for the quarter and full year 2020 reflects our ability to successfully grow subscription annual recurring revenue, or ARR, and recurring revenue. Both are key tenants to our long-term strategic roadmap. More specifically, we grew high margin subscription ARR 29% to a record $11.6 million in 2020, which has established a solid foundation for predictable growth in the years ahead. Now let's look at the results in more detail. Revenue for the fourth quarter of 2020 was $6.9 million compared to $6.2 million in Q4 of last year. The increase in revenue is primarily due to higher subscription maintenance and support revenue, as well as higher subscription bookings. For the full year 2020 revenue increased 15% to $29.1 million from $25.4 million in the same period last year. The increase was primarily due to a large customer order received at the end of the first quarter of 2020. During the fourth quarter, we added nine new cloud customers, one on-premise customer, and converted one enterprise customer to cloud. For the full year 2020, we have secured 33 new customers and deployments. In comparison, we secured 20 new customers and deployments for all of 2019. This is a 65% increase year over year. Subscription, maintenance, and support revenue for the fourth quarter of 2020 increased 23%. to $5.4 million from $4.4 million in Q4 of last year. The 23% increase was driven by new cloud and term deals signed in 2020 with minimal cloud usage overage fees. Cloud usage continues to grow with significant increases being driven by new use cases and enterprises driving their daily operations through the efficient and effective use of video. For the full year of 2020, subscription, maintenance, and support revenue increased 7% to $19.6 million from $18.2 million for the full year 2019. The 2020 increase was partially offset by the recognition of large-term license renewals in 2019 that were absent in the comparable period of 2020. At quarter end, our SAS gross renewal rate, or GRR, was 94%. compared to 90% at the end of Q4 2019. Our net renewal rate or NRR was 128% compared to 115% at the end of Q4 2019. And lastly, our dollar value retention was 103% compared to 90% at the end of Q4 2019. Deferred revenue at quarter end was $16.4 million, up 3% from the prior quarter and up 42% from Q4 of last year. Looking into our margins, gross margins for Q4 2020 was 75.7%, up from 68.8% in Q4 of last year. The increase was primarily due to a favorable sales mix and an increase in higher margin SAS revenue. For the full year 2020, gross margin was 71.3%, compared to 72.2% for the full year 2019. The slight decrease was primarily due to a higher mix of appliance revenue in 2020, which generally carries lower margins. Turning to our profitability metrics, net loss for the fourth quarter of 2020 was $4 million, or $0.29 loss per basic and diluted share. This compares to a $1.7 million loss, or $1. 14 cent loss per basic share and a 17 cent loss per diluted share in the fourth quarter of last year. Net loss in the fourth quarter of 2020 was negatively impacted by $1.1 million in non-cash expense associated with an increase in the warrant liability fair value, primarily due to the company's higher stock price in the fourth quarter of 2020. The company incurred approximately $917,000 in non-cash office lease charges related to the enactment of our remote work policy and surrender of three office spaces, as well as associated with the initial implementation of our long-term strategic roadmap and higher commissions. For the full year 2020, net loss was $9.2 million or 68 cents loss per basic share and a $0.70 loss per diluted share compared to a net loss of $6.4 million or $0.62 loss per basic share and $0.63 loss per diluted share for the full year 2019. Net loss for 2020 was favorably impacted by higher gross profit driven by higher revenue in 2020 and lower interest expense given our repayment of our term loan in the fourth quarter of 2019. These favorable impacts were offset in 2020 by the items previously noted and $664,000 in severance charges, $1.8 million resulting from the unfavorable impact of changes in the warrant liability fair value, and $1.6 million in transaction expense associated with our now terminated merger with Cinecor. Adjusted EBITDA loss, a non-GAAP metric for the fourth quarter 2020, totaled $1.1 million compared to a loss of $1.2 million in Q4 of last year. For the full year 2020, adjusted EBITDA loss totaled $2.3 million. This was an improvement from the loss of $2.9 million for the full year 2019. At quarter end, we had a healthy liquidity position. with $11.9 million in cash and cash equivalents, which was up $500,000 from $11.4 million at September 30th of 2020. On January 29th of this year, we solidified our balance sheet by issuing 3.7 million shares and raising approximately $23.1 million in an underwritten public offering. including the net proceeds from the offering, cash and cash equivalents totaled $32.6 million as of January 31st, 2021. Earlier in January, we also closed a $10 million revolving credit facility with Wells Fargo and borrowed $1.8 million to repay the face amount of the note payable to ESW Holdings. Also occurring in January was Hale Capital, this exercise of approximately 76,000 warrants of its total 314,000 warrants, which had an exercise price of $2.80 per share. With all of that said, switching to Outlook, as we've talked about on prior calls, Kumu provides revenue guidance based on current market conditions and expectations, including the unknown financial impact COVID-19 will have on economies and enterprises around the world. Based on our Q4 financial results and pipeline of business, we expect at least 20% revenue growth, or total revenue of approximately $35 million in 2021. As we continue to expand our SaaS, Salesforce, and marketing efforts, our operating expenses will increase significantly in the first half of 2021 as compared to the first half of 2020. And we expect our revenue growth rate to accelerate significantly in the second half of 2021 as compared to the first half of 2021. With that, For more detailed analysis of our financial results, please refer to today's earnings release, as well as our 10K, which we plan to file by March 9th. This completes the financial summary, and I'll now turn the call over to TJ to discuss our operational progress and more on our outlook.
spk03: Thanks, Dave, and good afternoon. It's a pleasure to have this opportunity to speak with you all today. As you just heard in so many words from our financial performance, 2020 was a big year for us. In what was a transformative period for our business and the rest of the world, we finished the year strong in our positioning Khumbu in 2021 to achieve our long-term growth goals. Due to COVID-19 and the new global work-from-home reality, 2020 was the year that mainstreamed the use of video for businesses of all sizes. A recent Gartner survey revealed that 82% of company leaders plan to allow employees to work remotely some of the time, and nearly half, 47%, said they plan to allow employees to work remotely full time going forward. A massive increase in the number of virtual meetings brought on by the change to the way we now work, necessitated initially by the pandemic, forced enterprises of all sizes to double down on implementing a broader use of video conferencing tools to replace the office conference room and allow hybrid and remote work. We believe that in 2021, this trend of permanently remote and hybrid work will continue, and the enterprise use of video will grow. With this newly captured video content, another dilemma was created, which is how we keep, track, store, and manage it effectively. How can the enterprise make the best use of video to save time to add value for global customers and employees? Enterprises in 2021 need to secure, store, and leverage this content better to better manage and grow their business. Video usage will become more sophisticated in 2021, and employees will leverage both synchronous and asynchronous video to be more efficient and effective in how they conduct their business. Kumu has been purpose-built to provide the global enterprise with secure, scalable, live, and on-demand video content. We are uniquely suited to extend this value now and into the future. Kimu operates a business in the enterprise collaboration technology space, supporting organizations that believe remote work, travel minimization, and virtualized events are both sustainable and the new normal. We help organizations of all sizes maintain business continuity as they implement work-at-home policies, restrict travel, and virtualize events. And we also extend the functionality of tools like Zoom, WebEx, Microsoft Teams, and Streams by adding massive scale, enterprise-grade security, comprehensive video asset management, and self-service broadcasting. Our technology is leveraged by organizations for live and on-demand video use cases, including executive webcasting, product launches, customer training, wellness communications, and employee onboarding. Enterprises can manage content in portals or channels to target communications for specific audiences. At our core, we believe it is important for Kumu to be one of the first companies in our space to acknowledge this fundamental change in workplace dynamic and leverage the technology we provide to make it happen. In December, we announced virtualization of the entire Kumu workforce, eliminated dedicated office space as part of our work transformation initiative, which we call our work from wherever forever policy. As part of this effort, we entered flexible shared workspace arrangements in London and Minneapolis and finalized our shared office workspace arrangement in Hyderabad, India. We also expanded our company-wide home office program to optimize employee effectiveness for the benefit of all Kumu employees and our global customer base. This kind of change requires rethinking what is needed for employee success, including providing the necessary connection points with processes and technologies. This means leveraging our best-in-class SaaS tools for collaboration, infrastructure and operations, such as our cloud video platform, which enables our employees to use video in all the ways that we work. We changed the way we work to include not just live video, but the regular daily use of asynchronous video on demand. Asynchronous video will allow employees to communicate more in different time zones around the world and move faster. We are providing all full-time employees with a work-at-home stipend and have implemented local team meetups and social gatherings when permitted based on local public health considerations and guidelines. We've also implemented new employee feedback and visibility tools to enhance collaboration and allow remote teams to share real-time progress on major projects. Kumu has created a culture that is truly boundaryless, and our employees are thriving in helping Kumu scale. In parallel, we also began executing on our strategic roadmap to significantly expand our revenue-generating team across both the Americas and Europe. Executing on our strategic roadmap and achieving our aggressive growth plans demand that we have the freedom to quickly bring on world-class talent from a global resource pool. Our work from wherever forever policy has given us the flexibility to hire the best people, unconstrained by geography or relocation obstacles, and at the same time facilitate greater employee diversity and inclusion. Offering flexible working arrangements are now a significant differentiator when competing for high-end talent, and we're excited about the possibilities on the recruiting front. We have been impressed by how important this proactive approach and flexibility has been in getting top-end talented resources to join the Kumu team. As part of this change, we have now brought on board our new Chief Revenue Officer, Lauren Goldstein. Lauren comes to Kumu straight from being a high-growth CRO and sales thought leader who knows how to grow teams that will build more success with closing deals and building revenue. Her experience with building world-class channels will also be put to very good use at Kumo. Lauren Goldstein is a growth leader with 25 years of experience scaling organizations and delivering success to some of the world's most respected and innovative companies, including Adobe, Airbnb, Alteryx, American Express, GE, Google, HP, IBM, JPMorgan Chase, LinkedIn, Microsoft, Salesforce, and Tableau. And her role as Chief Revenue Officer at Annuitas a demand market and business growth services firm, Lauren helped transform enterprise organizations through strategic sales and marketing programs that build stronger brands, better customer experiences, and more sustainable revenue growth. She also brings two decades of experience building out partner sales channels with enterprise class marketing technology organizations like Adobe and Oracle. We also believe a work from wherever, forever policy is the socially responsible thing to do for our employees and their health, for the well-being of the planet and for our outside stakeholders and their investments in our future. One of the primary objectives is to set a great example for other organizations when it comes to remote work, and I'm incredibly proud to say that we've achieved our objective. Our remote work policy underscores Kumu's foundation of values and our focus on environmental, societal, and governance programs, or ESG. Our ESG framework is built on best practices that guide our decision-making on a daily basis. As part of this we've established a diversity equity inclusion committee that is led by our chief commercial officer and chief counsel Jason Karp. We are incredibly proud of the initiatives we have in place in these areas, which we think bodes well for our stakeholders as we continue to grow. From this point I'd like to spend the rest of my prepared remarks and review of our strategic roadmap execution, the goal of which is to position Kumu as a more focused cloud first organization driving improved high margin recurring revenues. As Dave previously mentioned, the proceeds from the successful offering and working capital facility we completed in January have provided the resources to accelerate the key initiatives within our long-term strategic roadmap and keep us well capitalized for other high value opportunities. Now let's talk about some of those, some of these opportunities and related strategic initiatives We have three key areas of strategic focus in our business today. All three are focused on providing increasing value to our customers and prospects, which will ultimately drive long-term profitable growth at Kumu. These focal strategies, the prioritization and elevation of our SaaS offering, the extension of our addressable market, and the evolution of our go-to-market motion. Prioritizing and elevating Kumu in the cloud, starting with our first major initiative, which is prioritizing and elevating Kumu, A key driver of a strong financial performance in Q4 in 2020 was the record cloud video usage on our platform, which exceeded 32 million monthly viewers during Q4. This jump represents more than 880% increase in platform usage from Q4 of 2019. Tumor is obsessed with helping our global customers use video to power remote collaboration and engage more effectively with employees, customers, and partners. As Dave mentioned during Q4, we added eight new cloud customers and converted one large enterprise customer to our cloud platform. For the year, we have five on-premise to cloud conversions, demonstrating our success expanding our cloud and hybrid customer base. It's important to note that cloud conversions will add ARR for total bookings, but revenue will be split between subscription and maintenance. As our business model continues to transform to SaaS, keep in mind that while we expect overall double-digit revenue growth, The on-premises portion will plateau, while the high value and higher margin SaaS revenue stream accelerates. This crossover is happening now. We have also focused our research and development on growing our cloud product line and investing in the growing cloud platform that continues to see more demand each quarter. We continue to add capability as well as integration to other cloud platforms that drive interoperability and ease of use for our customers. Developing our partner ecosystem is a critical element in our SaaS strategy. The value we deliver to our customers will be extended through product channel and distribution partnerships as we move forward. We have leadership in place to help us establish and build strategic partnerships and a global alliance program. I'm encouraged to report that we have already implemented a new partnership with Social Live, a video creation and live streaming platform for businesses. Social Live will help Kumu's customers create more high quality video across the enterprise. Partners like Social Live we entered into an agreement with last month will drive even more engagement, leveraging both synchronous and asynchronous video due to the ease of capture and creating video in concert with Kumu's ability to securely distribute and manage all video that is being created. We will continue to identify partners to drive differentiated customer value in 2021. Our team's consistent and successful execution over the past few months on our strategic roadmap has created significant momentum heading into 2021. Looking forward, Kumu continues to benefit from the massive shift to remote work and the increased need for large-scale streaming, video on demand, and video content management capabilities. As the reliable leader of cloud-based enterprise video technology for organizations of all sizes, we expect to play a leading role in the ongoing transformation for how organizations communicate. Those that have followed our company for a while No, Kumu has historically targeted very large enterprise companies with 50,000 to 300,000 plus employees. As part of our strategic plan, we are now making a concerted effort to expand into the mid-market with offerings for small and medium-sized enterprises. These enterprises can range from 1,000 to 50,000 employees. We are making the Kumu brand more approachable to mid-market firms and are now implementing a new go-to-market approach to target small and medium-sized enterprises as well as the very large enterprises. We think the needs of these enterprises have grown and the technology and economics make sense for this push in 2021. While we are extending the value offered to the market through our mid-market offerings, we will also maintain and grow our leadership position with the very large global enterprises. In Q4, we had a major win with Dow Chemical, one of the largest chemical producers with a presence in about 160 countries and 54,000 people worldwide. Our team secured a new contract with Dow Chemical for our cloud platform, Kumu, Enterprise Video as a Service, DAO will be migrating to our cloud platform over the next couple of quarters. We've also brought a new leadership in our marketing team that has a tremendous background in SaaS, and they are focused on a new account-based marketing strategy that will specifically target growing more large enterprise accounts. We believe these efforts are critical to grow new large enterprise accounts based on our previous success, our use cases, and our ability to truly solve key business problems for large businesses. I'm encouraged to report that our sales and marketing restructuring is complete. Since December, we've been actively building our roster of global sales reps for the enterprise and mid-enterprise targets and have this week brought on board a new chief revenue officer, Lauren Goldstein. Lauren is a proven leader with expertise in aligning corporate processes and messages to the needs of the market and in creating focused account-based new logo acquisition. Lauren's team will be responsible for driving a significant increase in ARR this year. In addition to growing our sales organization, our strategic plan involved investing in our cloud business to take advantage of current market trends and customer needs. Our enterprise video as a service platform was specifically designed with the smaller enterprises also in mind, allowing users to quickly customize an annual cloud video subscription based on parameters such as storage and bandwidth needs, distribution requirements, authenticated user limits, and more. These organizations appreciate that they can easily access a benefit from Kumu's best-in-class platform for creating, managing, and delivering live and on-demand video at scale. Just like in sales, our marketing hiring is ramping up as well, and we've made great strides expanding our resources, reach, and leadership. To that end, we recently appointed Jen Demas as our new Chief Marketing Officer. Jen leads our marketing efforts and strategic investments to accelerate momentum in the booming video marketplace. As a growth-focused CMO with 20 years plus driving business-to-business technology, marketing performance for companies like Gigster, Ignite, Plex Systems, and Polycom, Jen brings exactly the talent and expertise that Kumu needs to execute our aggressive growth plan. Jen is building a high-performance team that will partner with Lauren Goldstein and our Chief Customer Success Officer, Chad Sears, to drive Kumu's go-to-market growth. Over the last several months, Chad has unified and harmonized our professional services, customer success, customer support, product management, and account teams. We are developing strong leadership in each of these areas and are aggressively hiring to provide the support and value to our global customers have always counted on from Kumu as we continue to grow. Success within this group and our laser focus on retention has enabled us so far to grow ARR at a double digit rate and improve our SaaS customer retention rates, including 103% dollar value retention, 94% gross renewal rate, and 128% net renewal rate. All three metrics improved compared to the prior quarter. again demonstrating the mission-critical role that our solutions fill for our customers in more and more instances. Our healthy growths in net renewal rates increases combined with our growing high-margin subscription ARR are setting the course for sustainable growth and high-margin SaaS recurring revenues. Customers continue to select Kumu because they require more than a simple small-scale video conferencing or team collaboration solution to achieve true business continuity. Kumu enables businesses to grow and thrive in all work environments. Kumu provides reliable enterprise-grade infrastructure that supports an enterprise's permanent shift to a new global work-from-anywhere environment. Our customers choose Kumu because we have a highly scalable platform, a robust enterprise on-demand capability, world-class professional services and support, as well as market-leading security. The major shift has positioned Kumu to deliver greater value for existing customers and to increase our footprint in a massive global market. Enterprises have just undergone a crash course in using video for most individual and team meetings, and many are ready to take it to the next level. Asynchronous video on demand and streaming from anywhere at higher quality and scale with better managing large libraries of video content. We believe that 2021 is the year that enterprises focus on implementing robust video content management, video on demand, as well as larger scale solutions as they transition to work from anywhere or a permanent hybrid approach. These favorable market dynamics have us on track to achieve our financial and operational objectives in 2021. Our bolstered balance sheet has enabled us to lean into this opportunity with the right team, infrastructure, and resources to meet this growing demand and capitalize on the massive opportunity. which we believe will occur for the next several years. We are confident that the investments we have made will accelerate the evolution of CUNY subscription business model and expansion into new market opportunities. Longer term, we believe our building momentum and the successful execution of our strategic roadmap will translate to improved high margin recurring revenues, sustained adjusted EBITDA profitability, and ultimately net income profitability. That concludes our prepared remarks. We will now open it up to questions. Paul, please provide the appropriate instructions.
spk00: No problem, sir. As a reminder, ladies and gentlemen, if you have a question, please press star 1 on your telephone keypad. Again, it's star 1 on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question is from the line of Mike Lattimore with Northland Capital. Your line is open.
spk01: Great, yeah. Thanks very much. Congratulations on the great year here, guys. Thanks, Mike. In terms of the SaaS AR growth, it looks like it accelerated to 29% year over year from 18%. I guess, can you provide any more color on that type of acceleration? And then is that sort of 29% something that we should think about, you know, maybe going forward here as well?
spk03: Dave, you want to go ahead and take that?
spk04: Absolutely. So, Mike, on a year-over-year basis, we wound up adding more customers than we added in the prior year, which we reported significant growth there. Let me just grab the 65% increase year-over-year. So a big driver there is really the new customer ads. It was also bolstered by essentially conversions of our on-premise into the cloud-based solution, which is feeding our subscription revenue growth. On a go-forward basis, I'd actually suggest that embedded within our year-over-year annual revenue guidance, we would be achieving at least that and likely more with essentially the SaaS sales pods that we're putting together.
spk01: Okay, great. And then the deferred revenue grew quite a bit, 42%, I think, year over year. Is that tied to the SAS growth or is it kind of timing of maintenance journals?
spk04: It's a combination of both. Some of it is certainly tied to what we're doing with the subscription revenue growth. There's also a component that will play out in terms of the timing of when things are invoiced and effectively the runoff there as well.
spk01: Got it. And then it sounds like you're putting a bigger effort into kind of the go-to-market strategy around small business. Can you just elaborate a little bit on how your small business go-to-market strategies here this year?
spk03: TJ, do you want me to take that or would you like to? Sure, I'm happy to. So, you know, really, Mike, we try to look at it as small enterprise because we're not going to be going after necessarily small business. But the reality of small enterprise for us is kind of in that 1, 2, 3, 4,000 employee range. And mid-market enterprise for us is 5,000 to 50,000 employees. And so in the mid-market, we're definitely building SaaS sales pods that are very focused on communicating with them and driving that sales process. On the smaller side, we're driving it more through our online ability in e-commerce to be able to directly sell to them with less motion. And we're also driving that with some of our account-based marketing campaigns that are targeting both small and medium enterprises, which we did not target before in addition to the large enterprise where our largest focus is today.
spk01: Okay, I got it. I guess just one more for me. In terms of the SAS bookings in the corridor, were there sort of a variety of use cases, or was there a couple that were a little more pronounced than normal? Just kind of maybe touch on the use cases that were driving the bookings.
spk04: Great question. I'll give you a couple of just anecdotes here. So One of them was actually a conversion from on-premise into cloud, and it's about some of those bookings do relate to the reality that folks are recognizing that the cloud is an important place to be, and we've got a customer who's actually now running both solution sets when we talk about that conversion because they're deploying both. Also in connection with that, it comes down to the use cases behind it. So fundamentally, and this is where we've got great customer stories that we're essentially equipping our new sales teams with that communicate everything from within healthcare. We may have customers that are using about six use cases or seven or eight or nine use cases. Reality is when we go out and engage with our customers and go across the healthcare sector, for example, Mike, we're finding that we've got 30 to 35 use cases that when we aggregate all of the unique use cases across those platforms. So what we're doing is actually capturing these use cases, aggregating them, and helping existing customers to not only deploy the solution set more broadly within their existing enterprise, but this is a great feeder for essentially all the sales and SaaS sales teams that we've got because it doesn't really matter to us what that point of entry is. At the end of the day, we've got a point solution that solves a video pain today that can drive real business impact. And so we'll start with just about any use case, solving that pain point to move them forward. But then it's really down to our customer success organization to deal with that expansion. And as TJ noted, we've got 800 plus percent increased usage in the cloud-based platform. So These get leveraged out both for new and expansion of the existing base, and it truly is. It's a great question. It's use case driven.
spk01: All right, great. Thanks a lot. Good luck this year.
spk04: Thank you.
spk03: Thank you.
spk00: Once again, ladies and gentlemen, if you have a question, please press star 1 on your telephone keypad. Our next question is from Jeff Van Lee with Craig Hallam. Your line is open.
spk02: Great. Thanks for taking my questions, guys. A couple for me. I wanted to follow up on Mike's question there on the new customers. With respect to the cloud customers, what was the average size of those new customers, if you want to quote it in seats or however you want to sort of frame it, and sort of the spread as well, the distribution of the sizes? But just curious what size deals were embedded in there, and then also what you know, not quite a use case question, but as you look at, you know, sort of connectors, are you seeing particular drivers from the Zoom or other key platforms that are really driving, say, those new cloud customers this quarter?
spk04: So, Jeff, our use cases are quite broad. So, we did have within essentially the bookings in the quarter across the the nine net new, the one on-premise, and the enterprise, it's been very consistent with the ASPs that we've shared. So between when we're looking at, and remember, we've got essentially 5,000 to 50,000 of what we're calling mid-enterprise. Those ASPs were ranging from between 35,000 and 150,000. We did have the on-premise sale. Those sales are typically $150,000 plus. And then when we're dealing with the existing cloud customer, that was actually a fairly significant customer that we've had for many years who wound up converting over to cloud, but we're deploying new use cases for cloud within that enterprise, and eventually they'll come off the on-premise and move over to the SaaS space, and that's larger than our typical on-premise even.
spk02: Sure, sure. That's helpful. And then maybe just speak to the pipeline. I know TJ came in and made a pretty remarkable amount of change already. You're dropping a lot of new talent in. So I realize there's some unfairness embedded in the question, but I'm wondering if you can talk to the pipeline and any observations, A, of some of your early efforts showing up at the front end of that pipeline, and then, B, just talk to the breadth, depth, composition of the pipeline, you know, any call-outs there.
spk03: Yeah, I mean, a couple things happened at the end of Q4 and going into the beginning of Q1 where, you know, first of all, we put in place some really important rigor around Salesforce and around the opportunities as also the focus on our cloud solution versus on-prem. And so there was a lot of cleanup that occurred as part of bringing in new leadership into sales and marketing to really go through that pipeline, really drive out any and all opportunities that were present in it and make it a very real pipeline. To some degree, break it down before you build it back up. We are now starting to, here in Q1, build up account-based marketing campaigns to drive and increase that pipeline, and those are just underway, you know, in the past month as well. And those new opportunities are now being fed into what I would call is a much more clean and focused SaaS pipeline going forward for us. So very much it's about – getting it focused and driving the new opportunities that are really in the SaaS space for us. And so the good news is I think what we can say more on a qualitative level is I think that the opportunities that we now have coming in and adding to that are more high-quality SaaS opportunities, both large enterprise and mid-enterprise, and that's been the focus of where we're going. I'm not going to report out on any pipeline coverage today. I think as we go forward and we build this drive between marketing and sales going forward, we'll have more to talk about in upcoming quarters. But definitely a new focus and drive to make sure that we really – drive through the data and have data-driven metrics on the opportunities that we're pursuing and also going after them in a very aggressive way. We're using a lot of video as part of our sales routines, and we're doing a lot of review and coaching from the sales side to our regional sales leaders as they're out there. And this is going to drive better results for us in 2021.
spk02: Yeah. Helpful. Last one for me, just on the EBITDA side. As you're mapping out the, you know, obviously you've given the growth, you've made it clear you're investing front end, back end is the revenue growth. At this point, just anything you can share in terms of where you think that breakeven crossover is on EBITDA?
spk04: Yeah, and we're looking at it as probably $11 to $12 million in revenue, and we're looking at essentially the adjusted EBITDA crossover to be probably first half of 2022. Okay.
spk02: Okay, got it. Thank you, guys. Thanks, Jeff.
spk00: Once again, ladies and gentlemen, if you have a question, please press star 1 on your telephone keypad. If you have a follow-up, please press star 1 at this time. Please stand by while we check if there are additional questions. We have a follow-up. From the line of Mr. Mike Latimore with Northland Capital, your line is open.
spk01: Great. Yeah, thanks. I guess I'll get a couple more in here. In terms of the customer success team, I think you were going to add 15 to 20 people in that group. I guess what's the status of that? And is your new CRO, you know, kind of going to, you know, change that goal? Or is it pretty set on you?
spk03: So a couple of things on that, Mike. On the CRO side with our sales hiring, very much significantly underway and continuing to round out that team here in Q1. And the hiring has been, you know, mostly on target, a little bit behind, but pretty close to where we want to be. On the customer success side, we're continuing to hire into the customer success manager roles. Some additional hiring still needed there. I would say it's slightly behind where we're at on the sales side, which is further ahead and pretty much on target at this point.
spk01: Okay, got it. And then I guess just back on the bookings and pipeline, obviously a lot of focus on virtual events this year, whether it's hosting conferences virtually or CEOs doing virtual events with their employees. Can you talk a little bit about virtual events as a driver of the bookings and pipelines?
spk03: Sure, a lot of virtual events for us have been happening through the enterprise sales motions. One of the things we saw really improve later in the year was that a lot of our customers who used Kumu quite often for many internal events are also now using it for more and more external events. And whether that's external and it's healthcare companies that are also working with patients and communicating in the community, or whether it's on the finance side where the key finance customers that are holding webinars and holding events, We see that continuing to grow, and that has continued to grow with their webinar and events that are on trusted platforms that have to work for these very large events. So we have definitely seen a growth in events kind of quarter over quarter, and these events are very much driven to drive both internal and external purposes for the business, whether it's training and learning on the internal side or communication, or on the external side it's actually hosting events large events that have replaced what were traditionally a lot of in person events. But I would say, even in the future, we believe as some events go back to in person, they're going to maintain this hybrid element where they're still live streaming that and they're still leveraging those events with video on demand after the fact. And that has continued to grow and enterprises have not just grown in the number of enterprises that do it, but also the amount of video streaming and video events that they hold has continued to increase.
spk04: Mike, I'd also add that along those same lines, one of our core differentiators is so to the extent that they're a Kumu customer and they've got the Kumu platform, if they're going outside to an ON24 or whatnot, that content oftentimes isn't in a centrally managed repository. It's not an asset that they get to work with down the road. And as a result, folks that can't attend live are trying to go look for a link somewhere. So the ability to repurpose those assets and deploy them very efficiently is That has been a part of just our sales team's just entry point. So where they need to manage that and bring all content together, it's a great talking point for us. And we're doing every single day dozens of live events, some of which are internal and some of which are broadcast. We don't have great visibility of what's happening in the on-premise just because of the nature that it is on-premise. But the cloud-based platforms, we can see that activity and definitely know that it's a driver to effectively this platform usage.
spk01: Yeah. Okay. I guess just last one. I have in my notes here that in the past, if somebody went from or a customer went from maintenance to SaaS, it was a 25% to 40% uplift in, I guess, its annual value. Is that still the way to think about it?
spk04: It is. As we go ahead and quote those out, that is exactly what we intend to do. Not every customer moves in that direction. Like, for instance, if we've got somebody who's actually taking it on as a second platform, they will come in different than the on-premise in its initial instance or life. So if they're just picking up, if they've got a big, bulky on-premise platform, for example, and then they're adding on cloud, and they don't plan to complete that migration over until, let's say, 24 months later, then the way that that plays out is we will go in for the specific business unit, business purpose, size it right for them, and then we give them a path to bring everything over in subsequent periods when they're ready to do so.
spk01: Okay.
spk04: Great. Thanks a lot. Yep.
spk03: Thanks, Mike.
spk00: Once again, ladies and gentlemen, if you have a question, please press star 1 in your telephone keypad. We have a follow-up from the line of Jeff Van Lee with Craig Hallam. Your line is open.
spk02: Yeah, just one quick follow-up for me. I think on the retention front, I mean, thanks for the retention metrics, always very helpful. But I'd be curious, you know, on the key metrics here, SAS and that retention, you know, and maybe the dollar retention as well, how should we think about that trending trend? through, you know, through 21. I mean, obviously you've got a lot of, you know, tailwinds uses, a lot of things are playing out in there. Just want to make sure we're sort of level setting. How do you see those numbers rolling through the year?
spk04: Yeah, I think at the headline, Jeff, my dollar value retention, you know, our goal is to take essentially what's been running probably 92, 93%. And with the creation of our customer success organization and the things that we're doing to, to, to cross pollinate effectively use cases and get stickier with the platform, we envision and target our targeting, essentially bringing that to 94-plus percent at the headline. And then as you look at the SAS-related metrics, the ability to go ahead, and this really does drive back to essentially our SAS model, it doesn't really matter our point of entry. You know, if you look at essentially how a bowtie funnel works for a SAS organization, you know, 60% to 70% of LTV comes out of that post-initial sale sort of approach. And that's exactly what we're building with the customer success and account management organization, the playbooks that we've built and the training that we're deploying to back the new personnel.
spk02: Okay. Fair enough. Great. Thanks.
spk00: Once again, ladies and gentlemen, if you have a question or follow-up, please press R1 at this time. Once again, hit star 1 on your telephone keypad. As I am showing no further questions at this time, I would now like to turn the conference back to Mr. T.J. Kennedy, President and CEO. Thanks, Paul.
spk03: I appreciate it. And thank you, everyone, for joining our call this afternoon. We appreciate your continued support as we execute on our growth plan and scale Kumu to the next level. I look forward to speaking with you again very soon.
spk00: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a great day and stay safe.
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