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spk00: Q's first quarter 2021 conference call. My name is Ashley and I will be your operator this afternoon. Joining us is Q's president and CEO, T.J. Kennedy, CFO, Dave Risto, COO, Rose Bantley, and Matt Glover from Gateway Investor Relations. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to turn the call over to Matt Clover. Sir, you may begin.
spk07: Thanks, Ashley, and good afternoon, everyone. After the market closed today, Kumu issued a press release announcing its financial results for the first quarter ended March 31, 2021, a copy of which is available in the investor relations section of the company's website. During today's call, management 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, except as required by law. Please refer to Kumu's SEC filings, specifically Form 10-K 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 may find additional disclosures regarding 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 everyone that this call is being recorded and will be made available for replay via link available in the investor relations section of Kumu's website. Now I would like to turn the call over to Kumu's president and CEO, T.J. Kennedy. T.J.?
spk05: Thank you, Matt, and good afternoon, everyone. It's a pleasure to be here with you today. Also on the call with me is our CFO, Dave Risto, and our new COO, Rose Bentley. Rose joined us last month to lead our global operations and manage the day-to-day execution of our growth strategy. Before Kumu, she led operations and go-to-market strategy for a 1.8 billion revenue analytics company. Before that, Rose led global sales and customer success at a leading customer experience management company, which was acquired in 2019. Rose's experience and leadership will be critical as we continue to win the hearts and minds of customers through innovative solutions that will shape the future of work for the next generation. For today's call, I will kick off on the worldwide shift to hybrid and asynchronous work, and then we'll cover a high-level overview of our Q1 results and operational progress within the context of this strategic roadmap. Then I will turn it over to Dave, who will walk you through our detailed financial performance for Q1 and outlook for 2021. Rose will then discuss select key operational initiatives. Afterwards, I will speak to our growth initiatives and the next phase of our strategic roadmap. The world changed in 2020. We are not going back to the way work was before the pandemic. Last year, enterprises replaced conference room meetings with video teleconference platforms as the first response to remote work. The world proved that meetings could be held remotely, and attendees no longer had to be in the same physical space to be effective. This is just the beginning of the transformation of work. 2021 will mark the real change to work. Work will now include asynchronous work and collaboration that is unencumbered by location and time zone. The future of Kumu Video at Work is about more than just large-scale synchronous live video, but also asynchronous video and what we at Kumu refer to as video on demand. Asynchronous video opens up an entirely new dimension of asynchronous work that is more effective and efficient. Asynchronous and synchronous work require platforms like Kumu that offer both options that are seamlessly integrated together, as well as enterprise security and enterprise video content management. The market to address this new way of work is just starting to grow. Adoption of new technologies by business is growing in 2021. I feel that we are just at the beginning of the significant change in the way enterprises around the world will think about and conduct work. At Kumu, we are building the team to handle the significant shift in how technology will enable businesses to thrive and to facilitate Kumu growing with them as they go on their journey to work from wherever, whenever. We have updated our work from wherever approach to swap in whenever for forever as it is a foregone conclusion that work will not go back to exactly what we had before the pandemic. Hybrid work and permanent work from wherever, whenever is the change that is already underway. Whenever truly highlights the fact that more and more work will be asynchronous. In Q1 2021, we completed the second phase of our two-year strategic roadmap. Phase two was focused on implementing the key restructure required to strengthen Kumu's position as a leader in cloud-first enterprise video, transitioning us into a SaaS-first company, as well as establishing the infrastructure for accelerated growth. As some of you know, Phase 1, which commenced following my appointment last July, involved a comprehensive evaluation of Kumu's business, as well as a detailed assessment of our market positioning and industry dynamics, resulting in Kumu's strategic roadmap. At a high level, the evaluation confirms several things we believe to be important, including Kumu's competitive strengths and advantages, which are enabling hyper-distributed engagement, delivering the right content at any time, and leveraging the power of enterprise video to drive measurable business impact. We took these findings and developed a go-forward two-year strategic roadmap. We initiated phase two of our plan in late Q4 2020 and concluded it at the end of Q1 2021. Phase two involves strengthening the leadership team as well as bolstering our customer facing teams. We have successfully restructured our sales and marketing teams and implemented a new customer success team. We have now brought on board 27 new sales and marketing personnel above our previous level of staffing, including an additional seven customer success team members. In our hiring, we specifically targeted talent that showed the same excitement we feel about the future of video in the enterprise, shared our absolute commitment to the customer, and demonstrated a drive to excel in their roles to generate the financial results for Kumu that should be a natural extension of the market opportunity and Kumu's competitive strengths and advantages. With these changes in place, Kumu is in a solid position to drive scale and sustainable growth into the future. We plan to further expand our revenue-generating teams to meet market demand and continue to drive our obsession with our customer every step of the way. During this process, we had four key achievements I would like to highlight. First, we implemented a customer-first and SaaS-first approach across both our organization and business model, and we refined our go-to-market strategy to better align with our strengths and industry growth opportunities. We leveraged our work from wherever, whenever approach to strengthen our team by expanding our universe of available applicants and offering greater certainty to where our work would occur for employees and provide flexibility to our team. This enabled us to bolster our go-to-market teams across pipeline development, direct sales, sales channels, customer success, and geographic regions. Third, we solidified our balance sheet by adding $23.1 million in cash through an equity raise in January And fourth, we established ESG and diversity, equity, and inclusion initiatives and corporate social responsibility mandates that have been well-received by our stakeholders. Clearly, we have accomplished a lot in a relatively short period of time, and I'm incredibly proud of our organization's unwavering commitment and dedication to driving demonstrable results and delivering on the community vision. Our focus during the first quarter of this year was on building the infrastructure and aggregating the resources and talent to take Kumu to the next level of growth and performance. This included hiring and onboarding the right people, arming them with the right tools to be successful, and then leveraging them to start to cultivate and drive new business. While our operational execution against our strategic roadmap in Q1 was and continues to be solid in alignment with the roadmap, we have encountered temporary challenges that can be expected with this kind of accelerated change from on-premise to the cloud. which caused our top line to come in lower than desired. We have always anticipated that the first half of 2021 was going to be the build part of the plan, and that is exactly the case. Q1 was an important and necessary transitionary period for our company, which continues as we grow and add resources, especially for our sales and marketing teams. Our collective focus during the quarter was first on onboarding new sales professionals, training the customer facing teams, and implementing enhanced sales strategies. And second, on reviewing our existing historical pipeline, making necessary adjustments in order to prepare for the SaaS business we are building going forward. This focus was critical to executing on our roadmap, but not unexpectedly created challenges in securing new logos so early in the transformative process. However, despite these anticipated challenges, we are seeing improvements in the critical indicators to our SaaS business, providing greater visibility. From a pure sales perspective, we closed on new SaaS sales that are aligned with our strategy, including adding new logos, and perhaps most notably, closing on our large cloud conversion of an international telecommunications giant in Q1. To put it in relative percentage terms, we delivered 21% year-over-year growth in our SaaS subscription annual recurring revenue, reflecting our continued success transitioning to a more predictable SaaS-based business model, which is building a solid foundation for predictable growth in the years ahead. The 21% year-over-year increase in ARR is the result of effectively converting on-prem customers to the Kumu Cloud and better customer alignment, resulting in increased retention from our customer success efforts. Our focus on driving cloud conversions continue to produce promising results. We also continue to achieve solid SaaS customer retention metrics, including 104% rolling 12-month SaaS renewal rate as of quarter end. In terms of customer retention and expansion, our SaaS customer retention metrics in Q1 were solid with year-over-year increases in several metrics, including a 5% increase in gross renewal rate, a 9% increase in net renewal rate, a 14% increase in dollar value retention, as well as a 6.6% increase in overall gross margin, and deferred revenue was up 30% in Q1 of 2021 over Q1 of 2020. Before I dive deeper into our execution of strategy, growth initiatives, and outlook, I'll turn it over to Dave to walk you through our key financial results for the first quarter and outlook for 2021. Dave?
spk06: Thank you, TJ, and good afternoon, everyone. Turning to our Q1 results in more detail, revenue for the first quarter of 2021 was $5.8 million compared to $6.2 million in Q1 of last year, and this compares to $6.9 million in Q4 of 2021. In Q1 2021 and Q4 of 2020, total revenue was negatively impacted by the expected decline of on-premise and appliance revenue as our target market shifts to the use of SaaS solutions, which aligns with our long-term strategic roadmap. Compared to Q4 2020, total revenue in Q1 2021 was lower due to a one-time term license recognition event in Q4 relating to a large and successful cloud conversion. as well as slightly higher cloud usage overage fees in the quarter. First quarter 2021 also experienced slightly lower maintenance and support revenue due to cloud conversions now recognized in subscription revenue and lower on-premise maintenance recognized for customers not using on-premise appliances due to present remote working arrangements with our customers. The key to our strategic roadmap is growing our subscription business, and we are pleased to report that subscription and professional service revenues were very much in line with expectations for phase two of our transition plan, as TJ had previously noted. Subscription, maintenance, and support revenue for the first quarter of 2021 increased 20% to $5 million from $4.2 million in Q1 of last year. The 20% increase was driven by new cloud and term deals, as well as moderate cloud usage overage fees. Additionally, we saw year-over-year expansion in cloud engagement on our platform, driven by new use cases and enterprises driving their daily operations through the efficient and effective use of video. Looking at our SaaS metrics, as TJ mentioned, subscription ARR increased 21% to $11.9 million from $9.9 million in Q1 of last year. We anticipate annual recurring revenue to continue to grow as bookings of mid and large enterprise ramp with our SaaS selling efforts and as on-premise customers convert to our SaaS or hybrid platform. Our efforts to drive subscription ARR provides us with good visibility into the future revenues due to the ratable recognition of our subscription revenue. At quarter end, our SAS gross renewal rate, or GRR, it improved to 93%. This compares to 88% at the end of Q1 last year. Our SAS net renewal rate, or NRR, also improved to 126%, compared to 117% at the end of Q1 last year. And finally, our SAS dollar value retention, it grew. to 104%, and this compares to 90% at the end of Q1 2020. Deferred revenue at the end of the quarter was $14.8 million. This is up 30% from 11.4 million in Q1 of last year. And looking to our margins, gross margins for the first quarter of 2021 were 73%, an improvement from 67% in Q1 of last year. This is driven by a favorable sales mix and higher margin SaaS sales. As we continue to transition our business model to SaaS, we believe our gross margins can expand to the mid to high 70% range. Looking at our profitability metrics, net loss for the first quarter of 2021 totaled $4.5 million, or a $0.27 loss per basic share and a $0.29 loss per diluted share. This compares to a $2.7 million loss or a 20 cent loss per basic share and a 21 cent loss per diluted share in Q1 of last year. Adjusted EBITDA loss, it's a non-GAAP metric for the first quarter of 2021 totaled $4.1 million compared to a loss of $1.1 million in Q4 of last year. As expected, the higher adjusted EBITDA loss was due to investments we are making in connection with our strategic roadmap and growth plans. Shifting gears to our balance sheet, at quarter end, we had a rock-solid liquidity position with $27.6 million in cash and cash equivalents on hand. This liquidity provides us with the necessary resources and flexibility to continue our growth strategy. And finally, turning to our financial outlook and the expectations for 2021, TUMU provides revenue guidance based on current market conditions and expectations. Based on our Q1 results and our pipeline of business, we are reiterating our expectations for at least 20% revenue growth or total revenue of approximately $35 million in 2021, and this compares to 2020. As we continue to expand our SaaS sales force, we anticipate that our operating expenses will increase in Q2. As those investments take hold, we expect that our revenue growth rate to accelerate in the second half of 2021 as compared to the first half of 2021. So Kumu's prospects and customers are shifting to Kumu's cloud and subscription-based business model over our traditional on-premise solution. Last year, only 7% of our new sales were on-premise solutions and around 10% of our existing on-premise customers converted to the cloud. More on-premise customers are expected to migrate to a cloud solution in 2021, and although it's difficult to predict exactly how many, we expect an increase throughout the year in the number of our customers moving off-premise and into our cloud platform. Our new SaaS sales are expected to grow significantly in the second half of the year and will show an accretive long-term effect on our top-line revenue growth. For a more detailed analysis of our financial results, please refer to today's earnings release as well as our 10-Q. This completes my financial summary. I proudly now turn the call over to Rose to discuss key initiatives for our strategic roadmap. Rose?
spk01: Thanks, Dave. It's a pleasure to have this opportunity to speak with you this afternoon. As T.J. mentioned, I joined Kumu last month and will be leading the company's global operations at a critical inflection point. The adoption of video and as an increasingly integral communication medium for businesses globally as it is at an all-time high, and we intend to capitalize on this opportunity. As I like to say, time has become the new currency, and video is our new language. I am incredibly energized to help lead Kumu to its next phase of innovation guided by operational excellence. Building on TJ's opening remarks, prior to joining Kumu, I held a range of leadership roles at multiple SaaS technology companies where I was instrumental in in revitalizing, scaling, and driving business growth. In my most recent leadership role, I was charged with growing partner sales and accelerating the shift from perpetual license to subscription-based revenue. In that time, we expanded to over 90% of revenues in the cloud. As Kumu's new Chief Operating Officer, I will be leveraging my prior experiences to implement best practices and make smart investments to support Kumu's focus on operational excellence and industry leadership. Along that line, a key pillar of our strategic roadmap is investing in various functions across our business to drive growth and further our competitive lead. This includes investments in R&D to increase resources dedicated to the cloud technology developed and sales growth that results from this enhanced investment. Last week, we announced the development and release of our live captioning capabilities. This new release of Kumu Cloud provides artificial intelligence based translations of voice to on-screen captions for video viewers. Developed by our cloud engineering team, live captioning is immediately available as part of the QEMU offering without the need to upgrade. To maintain top standards, we are working closely with customers, including a national pharmacy and a COVID-19 vaccine administrator, to improve the accuracy, viewing, and user experience with multiple upgrades planned throughout the year. In parallel, as TJ mentioned, we are aggressively investing in SaaS sales and marketing teams to expand our footprint and reach into the market. We achieved our hiring goals in Q1, adding 48 highly qualified and talented professionals to our organization. Kumu's work from wherever, whenever policy continues to differentiate us in the hiring market and serves as a competitive advantage to attracting and retaining top talent. It has provided us the flexibility to hire the best people, minimizing geographical and relocation obstacles, and at the same time facilitating greater employee flexibility, diversity, and inclusion. Our employees, new and tenured, continue to thrive in their new virtual workspaces, supported by technologies, tools, and processes to ensure future success. In addition to helping our team collaborate more effectively, The technologies we have implemented across our organization are not only providing greater insights into our day-to-day operations, but also driving greater efficiencies as well. We now use asynchronous video across the organization to reduce the length of meetings and to allow team members to faster solve issues and drive our success. This is only one of the powerful ways we are giving our teams back time, and we will continue to embrace new and innovative practices to ensure our teams are able to meet the growing demands of our customers and our partners. This concludes my prepared remarks. I will turn the call back over to you, TJ.
spk05: Thank you, Rose. It's great to have you on board, and we're really excited about the positive changes you've been able to drive and spearhead since you joined. The future of Kumu is helping enterprises drive human engagement. The consistent video interaction with synchronous and asynchronous video is the future of the new work. Exciting from our perspective are the signs of early success and traction with the new sales and marketing approach we have been putting in place throughout Q1. We have also been able to start adding new SaaS pipeline at increasing rates. These signs of early traction have been taking place while putting our new programs in place, and more importantly, while hiring and training new business development reps, BDRs, and regional sales managers, RSMs, prior to full capacity and ramp. We look forward to these numbers growing as well as seeing future increased bookings from our BDRs and RSMs when they hit full ramp in five to seven months. The strategic roadmap process also revealed specific areas for improvement and opportunities to drive greater efficiencies and implement new and clearer strategies. These included, among other things, transforming our sales and business development approach to align our resources to our cloud-based SaaS offerings. We are focused on maturing our business-led selling approach that focuses on the new hybrid work that is transforming enterprises around the world and meeting the needs of the business leaders to change the way they communicate in a post-pandemic world environment. We are laser-focused on being customer-obsessed and have staffed our new customer success organization to focus on delivering value to the enterprise business leaders we serve. The changes described above are already resonating with our customers, and we are receiving positive feedback from customers that they have felt the change and that we can partner in their operational success, not just their technical success of leveraging video as the new way to communicate in both an asynchronous and asynchronous environment. The first and second phase of our strategic roadmap address the massive change to work. that is already here and has prepared Kumu to be a much more focused, capable, and scalable organization. Going forward, we will be actively executing on phase three of our plan, which involves continuing to ramp global sales and marketing resources capabilities and expanding our customer-obsessed culture across our sales and customer success teams. Our execution of this phase is intended to expand and diversify our customer base, deepen our customer and partner engagements, and transform our business model, which should translate to SaaS growth for Kumu for the second half of 2021. The first pillar of phase three of our strategic roadmap encompasses building up a customer success team to drive even higher customer retention. As part of this initiative, we are investing in a customer success team, adding customer success managers and additional account managers. This team is responsible for the continued unification and harmonization of our professional services, customer support, product management, and account management teams in order to drive increased value to our global customers as we scale. Our renewed focus on retention and obsession with the customer has enabled us to grow ARR at a double-digit rate year over year and improve our SaaS customer retention rates. Our healthy growth and net renewal rate increases combined with our growing high-margin subscription ARR are setting the course for sustainable growth and high-margin SaaS recurring revenues. The second pillar of phase three involves the evolution of our sales and marketing teams, who are laser-focused on global enterprise accounts and securing both expansion deals and new logos. The first initiative of the second pillar is ramping those sales and marketing teams, including additional hires, and educating, training, and integrating the new community, as we call them, into our organization and the Kumu culture of care. We develop comprehensive onboarding and training for all of our sales professionals. The second initiative of the second pillar is driving new business and expanding our pipeline of opportunities. Proper training and onboarding of sales professionals requires time, and as we expect the bulk of our current new sales professionals to be up and running in the field by the end of our second quarter. For this reason, we expect to realize solid new bookings growth starting in Q3 of this year. It's also important to keep in mind that our average sales cycle is approximately 90 to 120 days. sometimes longer for large enterprise accounts. For this reason, we believe measuring our success quarter to quarter in this phase of our growth evolution isn't the best barometer, as we will build momentum and increase traction through our sales efforts. But to be sure, our enhanced sales efforts and resources are demonstrating promising outcomes, both in terms of customer activity and touch points, and more importantly, a robust opportunity pipeline. The third pillar of phase three of our strategic roadmap involves activating a professional focused channel alliance and partnership effort. We are extending the value we deliver to our customers through strategic partnerships. Partners are supplementing our direct sales efforts and driving even more engagement on our platform, 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 into hyper distributed workforces. We believe our new partnerships can contribute meaningful ARR to Kumu, and we are collaborating closely to ensure commercial success. Connected to this effort, our team is actively identifying additional strategic partners to drive differentiated customer value in 2021. We believe the future of work will be based on enterprises that have employees working in many different locations and at different times. Kumu has a significant advantage with robust enterprise large-scale synchronous and asynchronous video with deep analytics and reporting. And as we convert legacy on-prem installations while layering in more cloud and hybrid deals, we expect to see significant margin expansion and more predictable and growing SaaS recurring revenue on a sequential basis. We have innovative technology and an enviable position as a leading provider of best-in-class live streaming and on-demand truly scalable video technology for hyper-distributed organizations of all sizes. We will leverage this position to capitalize on the abundant opportunities on the horizon, particularly given the ongoing proliferation of hybrid work and the growing need for daily video-enabled human engagement to drive business. Timu sits at the confluence of change amongst growing global markets that represent an aggregate $21.6 billion opportunity by 2024. According to industry analysts, approximately 72% of the total addressable market remains untapped and ripe for the taking. And with Kumu's proven and unique value proposition coupled with our clear market direction, we are confident that our growth plans are well within reach. These forceful industry tailwinds and favorable market dynamics have us on track to achieve our financial and operational objectives in 2021. A robust balance sheet will enable us to accelerate many of our growth initiatives. Continued execution against our plan positions us extremely well to meet our 20% plus revenue growth in 2021. Long-term, we believe our successful execution of our two-year strategic roadmap will mark the realization of our vision, which is a company operating at scale and benefiting from high margin recurring revenues, sustainable and growing adjusted EBITDA, and net income profitability. That concludes our prepared remarks. We will now open it up to questions. Operator, please provide the appropriate instructions.
spk00: As a reminder, to ask a question, you will need to press star one on your telephone. If there are a question, press the pound key. Your first question comes from the line of Jeff Van Re with Craig Callum Capital. Your line is now open.
spk03: Thanks, guys. This is Rudy on for Jeff. I want to start, TJ, Dave, I'm not sure who would take this. You know, when you guys do a prem to cloud migration, is there any uplift on the maintenance dollar to subscription dollar, say like a 1 to a 1.5 or something, or is that sort of a revenue neutral migration? And I guess depending on your answer to that, if there is an uplift, how much of the growth in 21 – is dependent upon those migrations, or how much are you baking in from those migrations? Hi, Rudy. This is Dave. I'll take it.
spk06: So in general, and this is consistent with what we've reported, we essentially track this quarter over quarter, and so for every single migration, we then look at those migrations on average. So an on-premise to a cloud migration on average will produce between 25% and about 42% uplift. Now, that can vary. It can be zero. It can be north of 42%. So those are the average for kind of a medium and then a large customer, respectively. What we then do when we're doing those migration routes is we size them. So effectively, when we're doing that conversion, not every piece of content, nor essentially their bandwidth, storage, and or concurrent live streams need to come on on day one when they start So we will move them over and at a minimum it's, it's flat and for the most part we have uplift in it. And then as you know, TJ has spoken about, I mean a big piece of our longterm strategy is actually growing from an LTV perspective, looking at getting probably 60 to 75% of our total revenues coming after an event such as a new customer edition or in a conversion. Because as we add new product, as we bring more users on, as we expand with new use cases, as we educate on the asynchronous video case, et cetera, and we begin to work into the workflows of enterprises, those are all upsell opportunities for us. So a little bit of a long-winded answer. At a minimum, it's generally zero, generally 25% to 42%. But what we really focus on is continuing to deliver value. And by doing that, we wind up enhancing our long-term revenue profile.
spk03: Got it. And then, you know, I know it's early with a five to seven month sales ramp for these new reps hired in Q1, not going to be productive early into the end of Q2. But I guess just at this point, what are you guys seeing in the early pipeline build thus far that still gives you conviction in the pretty steep revenue ramp in the second half?
spk05: Yeah, Rudy, this is TJ. I mean, from my perspective, we continue to see growth in the pipeline that happens week to week and month to month, and we've seen that through Q1 as we've started to ramp the resources that we have. Those early signs are very good signs for us. We track that through. a number of elements, whether we're looking at the number of calls, emails, and follow-up, but also the number of meetings being set, and then progressing them through our stages of sales and Salesforce. And so as we continue to see that pipeline grow and the quality of that pipeline improve for the SaaS opportunities and the key enterprises we're looking for, it gives us that confidence.
spk03: Got it. And then just lastly, I think you guys had said previously that you expected to burn, I think, roughly $10 million between here and becoming cash flow break-even again at some point in the first half of 2022. Is that thinking still the same or any changes to that?
spk06: Hi, Rudy. I'll take that as Dave. Thinking is the same. What we had previously communicated is that we will achieve adjusted EBITDA positivity as what our present outlook is. at the $11 to $12 million per quarter revenue range, and that that would occur probably in late H1 of 2022, and that between now and then that essentially cash burn would be between $10 and $12 million.
spk03: Got it. Very helpful. I'll jump back in the queue. Thanks, guys. Thanks, Rudy. Thanks, Rudy.
spk00: Your next question comes from the line of Mike Lattimore with Northland Capital Markets. Your line is now open.
spk02: Hi, guys. This is Anshul Sao on for Mike Lattimore. Could you give me an update on the demand for virtual events now versus six months ago?
spk05: Sure. This is TJ. I'll jump in on that one. We see virtual events continuing to happen. A couple of different things. We do see a lot of folks starting to do some hybrid events. We also see some events that started out being planned as hybrid but went all virtual as different COVID precautions go up and down, and there's been a lot of flexibility. We see from our customer base that the need to continue to have cloud-based and hybrid solutions for different major events is going to continue to happen, even as some events go in person. And the rationale behind that is there are still people not traveling. There are still people that will not be in person. And so it's a mixture of these events that will continue. And so we have not seen any significant change in the events that our customers are having.
spk02: Okay. Do you have much one-time revenue from virtual events to score? Sure. Sure.
spk06: So from a one-time virtual event, the answer is virtually nil. The reality is what we sell to enterprises are solutions that are charged on a subscription basis. It is quite rare that we wind up doing one-time events. If we do, it's generally professional services. And if we are doing that, the purpose in doing so is to actually get them prepared for and get them convinced that an enterprise solution to manage all of their video needs is the highest and best use of working with Kumu, and we like to prove that to them.
spk02: All right. And what process of booking coming from Channel Partners?
spk06: Great question. So Channel Partners has historically contributed about 22% of our annual revenue, It does vary quarter by quarter, and it really does depend upon deal mix and what's flowing through those partners. We're pretty consistent with that and in line with essentially that trajectory for the annual period within the quarter.
spk02: All right. And the last one, can you quantify the growth of SaaS pipelines?
spk05: At this point, we're not putting out specifics on growth of pipeline. We're early in our transformation and continuing to grow and change weekly, so we are not reporting out any specifics on that at this time.
spk02: All right. Thank you. Thank you.
spk00: Your next question comes from Stephen Franco with Colliers. Your line is now open. Thank you.
spk04: Good afternoon. TJ, in your commentary, you mentioned some roadblocks that led to revenues that were disappointing in Q1. I wonder if you could give us some specifics on what you encountered in the quarter and what you're putting in place to mitigate that going forward.
spk05: Yeah, I mean, I don't think there's too much specific, but just from a key, it's just the ramping and the fact that we've hired so many new people and getting them through key training and ramped and up to speed. As we do that, the time for them to get productive, as we talked about, is five to seven months later. We saw what was mostly anticipated, but that's also just part of that. Also, we continue to work with our existing partners and talking and integrating with new and potential new partners. Some of those newer partners, we still have more work to do. So I think more of that will be coming here in follow-on quarters. And so some things just take a little bit of time to get the traction that we want, like in some of the partner relationships in the future. And so we'll see more of that improve as we go ahead.
spk04: Okay, and then maybe for Rose, what's the profile of a successful QMU salesman? What are you looking for in terms of what they did prior and what they bring to QMU versus the people that used to be there?
spk01: Yeah, absolutely, Steve. I mean, I think in my experience, right, and as we start understanding what this profile looks like, and the reps that are really starting to make their mark, I think, on building pipeline are coming with a strong SaaS cloud video experience. They're coming in with easily five to 10 years experience selling into enterprise and down markets. They're coming in, of course, with an attitude that they need to ramp quickly, train proficiently, and be a part of the innovation and the future of work that we're looking, you know, looking to shape as we innovate and grow. And then, Dave, TJ, anything else you want to add to that?
spk05: No, I think you hit it.
spk04: Okay. And then maybe what's the biggest positive surprise in the couple months you've been at the company, Rose?
spk01: The biggest surprise is the amount of opportunity we had ahead of us. The ability that we have to innovate and make our mark on the market was probably a bigger surprise than I would have expected. It's one of the reasons, frankly, Steve and I joined the company was the market opportunity ahead of us, our ability to grow with partners and scale with our customers. But this is That's probably been my biggest surprise, and I'm excited to really be a part of that journey. Okay.
spk04: And then, Dave, what were allergies in the quarter, and what were they a year ago?
spk06: Yes, a year ago, a little over 150,000, and the quarter, it was just slightly under 100,000. Okay, great. Thank you.
spk04: Thanks, Steve. Thank you.
spk00: Thank you. At this time, this concludes the company's question and answer session. If your question was not taken, please contact Kumu's IR team at kumu at gatewayir.com. I would now like to turn the call back over to Mr. Kennedy for his closing remarks.
spk05: Thank you so much, and thank you to everyone for joining our call this afternoon. We appreciate your continued support as we scale Kumu to the next level. I look forward to speaking to all of you again soon. Thank you.
spk00: This concludes today's conference call. Thank you for joining. You may now disconnect.
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