8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported):  October 23, 2013

Qumu Corporation

(Exact name of Registrant as Specified in its Charter)

Minnesota

(State Or Other Jurisdiction Of Incorporation)

000-00619	41-1577970
(Commission File Number)	(I.R.S. Employer Identification No.)
7725 Washington Avenue South Minneapolis, MN	55439
(Address Of Principal Executive Offices)	(Zip Code)

(952) 683-7900

Registrant’s Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Items under Sections 1 and 3 through 8 are not applicable and therefore omitted.

ITEM 2.02    RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Qumu Corporation hereby furnishes as Exhibit 99.1 a press release issued on October 23, 2013 disclosing material non-public information regarding its results of operations for the quarter ended September 30, 2013 and hereby furnishes as Exhibit 99.2 statements of Sherman L. Black, its President and Chief Executive Officer, and James R. Stewart, its Chief Financial Officer, made on October 23, 2013 at a telephone conference relating to the quarter ended September 30, 2013 results.

ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.	Description
99.1	Press Release issued on October 23, 2013.
99.2	Statements of Sherman L. Black, President and Chief Executive Officer, and James R. Stewart, Chief Financial Officer at a telephone conference held on October 23, 2013.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

QUMU CORPORATION
By:	/s/ James R. Stewart
	James R. Stewart Chief Financial Officer

Date:  October 24, 2013

EX-99.1

Exhibit 99.1

Qumu Reports Third Quarter 2013 Financial Results

Software Revenues of $4.4 Million; Up 59% from 3Q 2012
Cash Balance at September 30 of $48.4 Million; $2 Million Above June 30 Balance
Conference call today at 4:30 p.m. ET

Minneapolis, MN – October 23, 2013 – Qumu Corporation (NASDAQ: QUMU) today reported its financial results for the third quarter ended September 30, 2013. Total revenues for the third quarter of 2013 were $21.1 million, an increase of 1% from the third quarter of 2012. Revenues continued to reflect strong growth in the software business, offset by declining disc publishing revenues. The Company reported cash and marketable securities at September 30, 2013 of $48.4 million, an increase of $2.3 million from the balance at June 30, 2013, reflecting improved disc publishing profitability and stronger working capital management.

Third Quarter Financial Highlights

· Total revenues for the third quarter 2013 were $21.1 million, 1% above revenues in the third quarter last year.

· Cash and marketable securities totaled $48.4 million at September 30, 2013, $2.3 million above the $46.1 million at June 30, 2013. The increase was attributable to improved disc publishing profitability and strong working capital management, including lower receivables and lower inventory.

· Software revenues totaled $4.4 million in the third quarter of 2013, an increase of 59% from $2.8 million in the third quarter of 2012. Software contracted commitments were $3.8 million in the third quarter 2013 and year to date totaled $11.6 million.

Sherman L. Black, president and CEO, said, “Our software business demonstrated continued traction in the third quarter with strong year over year revenue growth and we see growing customer interest and adoption of our enterprise video content management platform. We signed three new large customers in the third quarter, including a global financial services provider, the Canadian division of an international consulting firm and a governmental organization in the Middle East.

“On September 16^th, we changed our corporate name to Qumu and launched a new branding initiative. In addition, Qumu software was recognized as a leader in enterprise video content management in a Magic Quadrant report recently published by Gartner. The report validates the market potential and our differentiation, specifically our secure delivery, strength of enterprise integrations, flexible deployment and mobility. Customer reaction so far to these developments has been very promising, resulting in increased traction with new accounts. With the significant growth in our pipeline, we have high expectations for Q4 and expect our contracts to significantly exceed the level of any one of the prior three quarters.”

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“Cash generation from our disc publishing business increased during the third quarter, reflecting the impact of cost cutting measures, including a reduction in force, that we implemented in Q2, as well as improved inventory management,” Mr. Black stated. “We see solid demand for disc publishing in surveillance, media and entertainment, medical, photo retail and financial services and believe we can serve these markets and continue to generate cash for the Company on an ongoing basis.”

· Disc publishing revenues in the third quarter totaled $16.7 million, a decrease of 8% from the third quarter of 2012. The decline was the result of lower revenues from hardware, partially offset by strength in consumables, driven by strong retail purchases in the third quarter.

· Gross margin for the third quarter of 2013 was 47% compared with 48% in the third quarter last year. The decrease in the margin was due to product mix with lower high margin disc publishing hardware revenues, partially offset by higher margin software revenue. The gross margin for the software business was 53% in the recent third quarter; the disc publishing gross margin was 45%.

· Operating expenses in the third quarter were $11.0 million, down from $12.3 million in the second quarter of 2013 and $41.9 million in the third quarter a year ago, inclusive of non-recurring non-cash charges of $29.5 million for impairment of goodwill and intangible assets. Excluding the impact of these non-recurring charges, non-GAAP operating expenses in last year’s third quarter were $12.3 million. The reduction compared to last year reflected the impact of the cost cutting measures implemented in the second quarter, a reduction in disc publishing R&D project spending and lower legal fees.

· The net loss for the third quarter 2013 was $1.0 million, or $(0.12) per share. Excluding severance and the impact of amortization of intangibles, the third quarter net loss was $(0.08) per share. The net loss in last year’s third quarter totaled $42.8 million and 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 one-time charges and the impact of intangibles amortization, the non-GAAP net loss for the third quarter of 2012 was $0.9 million, or $(0.09) per share.

First Nine Months of 2013 Financial Highlights

· Total revenues for the first nine months of 2013 were $61.8 million, an increase of 5% over the same period of the prior year.

· Software revenues for the first nine months of 2013 grew 146% to $13.6 million. Disc publishing revenues declined 9% to $48.2 million.

· The net loss for the nine month period of 2013 was $6.9 million, or $(0.80) per share. The net loss for the nine month period of 2012 was $47.2 million, or $(4.64) per share. On a non-GAAP basis, excluding amortization and severance expense, the net Vloss per share for the nine month period of 2013 was $(0.61). This compares with a net loss of $4.7 million, in the first nine months of 2012, or $(0.46) per share on a non-GAAP basis, excluding one-time charges and amortization expenses.

The Company did not repurchase any shares of its common stock during the third quarter 2013. There are approximately 778,000 shares remaining for repurchase under the authorization. As of September 30, 2013, there were approximately 8,661,000 shares outstanding.

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Financial Guidance

The Company believes the revenue guidance previously established for 2013 is achievable and expects consolidated revenues to grow compared to 2012. Revenues from the software business are expected to grow greater than 70% in 2013 compared to 2012. This growth is expected to be partially offset by a decline in disc publishing revenues. Fourth quarter 2013 revenues are expected to be between $18 million and $20 million. For 2013, the Company expects the disc publishing business to generate cash and expects cash used in operations for the Company to remain in the low single digit millions.

Earnings per Share Reconciliation

	Third Quarter 2013	Nine Months 2013
GAAP earnings (loss) per share	$(0.12)	$(0.80)
Impact of amortization of intangibles	$0.04	$0.10
Severance	$0.00	$0.09
Non-GAAP earnings (loss) per share	$(0.08)	$(0.61)

	Third Quarter 2012	Nine Months 2012
GAAP earnings (loss) per share	$(4.23)	$(4.64)
Impact of amortization of intangibles	$0.03	$0.10
Impact of non cash charges for goodwill impairment, intangible asset impairment and deferred tax valuation allowance	$4.11	$4.08
Non-GAAP earnings (loss) per share	$(0.09)	$(0.46)

Note to reconcile non-GAAP financial measures to GAAP

Management believes non-GAAP financial information provides meaningful supplemental information regarding the Company’s financial performance by excluding the amortization of the Qumu software acquisition intangibles and severance expense that may not be indicative of the core business operating results. Management believes that this additional financial information is useful to management and investors in assessing the Company’s historical and future performance.

Conference Call

The Company has scheduled a conference call and webcast to review its third quarter results and recent corporate developments today, October 23, 2013 at 4:30 p.m. Eastern Time. The dial-in number for the conference call is 877-941-6009 for domestic participants and 480-629-9818 for international participants. Investors can also access a webcast of the live conference call by linking through the investor relations section of the Qumu website, www.qumu.com. Webcasts will be archived on Qumu’s website.

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Forward-Looking Statements

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” or “estimate” or comparable terminology are intended to identify forward-looking statements. Such forward-looking statements include, for example, statements about: the Company’s future revenue and operating performance, the demand for the Company’s products or software, the effect of changes in technology, the development and marketing of new products, or repurchases under the Company’s expanded stock repurchase program. The statements made by the Company are based upon management’s current expectations and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and other factors set forth in the Company’s filings with the Securities and Exchange Commission.

About Qumu

Video is the new document. Qumu Corporation (NASDAQ: QUMU) provides the tools businesses need to create, manage, secure, distribute and measure the success of their videos. Qumu's innovative solutions release the power in video to engage and empower employees, partners and clients. Qumu helps thousands of organizations around the world realize the greatest possible value from video and other rich content they create and publish. Whatever the audience size, viewer device or network configuration, Qumu solutions are how business does video. Additional information can be found at www.qumu.com.

Investor Contacts:
James Stewart, CFO
Qumu Corporation
952/683-7878

Jenifer Kirtland
EVC Group
415/568-9349

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QUMU CORPORATION
Selected Consolidated Financial Information
(In thousands except per share data)
(Unaudited)

Consolidated Statements of Operations Information:

	Three months ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
Revenues	$	21,073		$	20,949		$	61,817		$	58,694
Cost of revenues		11,151			10,811			32,211			30,686
Gross profit		9,922			10,138			29,606			28,008
Operating expenses:
Research and development		2,774			2,958			9,356			8,957
Selling, general and administrative		8,044			9,077			26,687			27,139
Goodwill & intangible assets impairment		—			29,548			—			29,548
Amortization of purchased intangibles		158			284			471			795
Total operating expenses		10,976			41,867			36,514			66,439
Operating loss		(1,054	)		(31,729	)		(6,908	)		(38,431	)
Other income (expense), net		36			64			(164	)		—
Loss before income taxes		(1,018	)		(31,665	)		(7,072	)		(38,431	)
Income tax expense (benefit)		(1	)		11,184			(2	)		9,008
Net loss		(1,017	)		(42,849	)		(7,070	)		(47,439	)
Net loss attributable to noncontrolling interest		—			81			125			216
Net loss attributable to Qumu	$	(1,017	)	$	(42,768	)	$	(6,945	)	$	(47,223	)
Net loss per basic share	$	(0.12	)	$	(4.23	)	$	(0.80	)	$	(4.64	)
Net loss per diluted share	$	(0.12	)	$	(4.23	)	$	(0.80	)	$	(4.64	)
Basic weighted average shares outstanding		8,697			10,112			8,689			10,168
Diluted weighted average shares outstanding		8,697			10,112			8,689			10,168

Non-Cash Charges Included in Consolidated Statements of Operations Information:

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
Depreciation	$	368	$	613	$	1,271	$	1,795
Amortization of intangibles
Cost of revenues		192		270		579		806
Amortization of purchased intangibles		158		284		471		795
Equity compensation
Cost of revenues		31		31		108		103
Research and development		73		110		360		343
Selling, general and administrative		283		350		910		1,184
Goodwill & intangible assets impairment		—		29,548		—		29,548

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QUMU CORPORATION
Selected Consolidated Financial Information
(In thousands except per share data)
(Unaudited)

Consolidated Balance Sheet Information:

	Balance as of
	September 30, 2013		December 31, 2012
Cash and marketable securities	$	48,350	$	50,140
Receivables		13,045		13,055
Inventories		4,550		6,036
Total current assets		72,708		75,950
Property and equipment, net		5,524		5,966
Total assets		90,534		95,563
Current liabilities		21,643		19,807
Long-term liabilities		3,979		5,129
Noncontrolling interest		—		103
Qumu stockholders’ equity		64,912		70,524

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EX-99.2

Exhibit 99.2

Qumu Corporation

3rd Quarter 2013 Conference Call

October 23, 2013

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Qumu Corporation 3Q 2013 Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. If you have a question, please press the star followed by the one on your touchtone phone. If you’d like to withdraw your question, please press the star followed by the two. If you’re using speaker equipment, please lift the handset before making your selection. This conference is being recorded today, Wednesday, October 23, 2013.

I would now like to turn the conference over to Doug Sherk of the EVC Group. Please go ahead, Mr. Sherk.

Doug Sherk

Thank you, Operator, and good afternoon everyone. After the close of the market today, Qumu issued a press release announcing its third quarter 2013 financial results. The release is available on the Company’s corporate website at www.qumu.com.

Before we get started, during the course of this conference call, the company will make forward-looking statements about its future plans, objectives, beliefs, expectations and prospects. For this purpose, any statements made today that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are not guarantees of future actions, outcomes, results or performance. By their nature, these forward-looking statements are subject to many risks and uncertainties that could cause actual results to differ materially from the resultsdiscussed in or implied by the forward-looking statement. A discussion of the risks and uncertainties that affect Qumu’s business is contained in the company’s SEC filings, particularly under the heading Risk Factors, and in the press release issued this afternoon. Copies of these documents are available online from the SEC or on the Qumu website. These forward-looking statements are made only as of the date this conference call was initially held and the Company assumes no obligation and does not intend to update these forward-looking statements after the date of this conference call, whether as a result of new information, future events, developments, changes in assumptions or otherwise.

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In addition, to supplement the GAAP numbers, we have provided non-GAAP information that excludes severance expenses and the amortization of Qumu acquisition intangibles. We believe that these non-GAAP numbers provide meaningful supplemental information and are helpful in assessing our historical and future business performance. A table reconciling the GAAP loss per share information to the non-GAAP information is included in our financial release.

And now, I’d like to turn the call over to Sherman Black, President and CEO of Qumu.

Sherman Black

· Good afternoon and thank you for joining us on our third quarter 2013 conference call.

· With me today is Jim Stewart, our Chief Financial Officer.

· Today we announced our third quarter financial results. Total revenues of $21 million were at the high end of our guidance and we increased our cash position by $2 million.

· Software revenues were $4.4 million, a strong increase from a year ago, but not at a level that we believe reflects our potential and significantly growing pipeline.

· I’d like to spend the next several minutes discussing some recent initiatives we undertook in the quarter to strengthen our position in the enterprise video content management market and the success we’ve seen to date. I’ll also provide an update on our disc publishing business and the outlook. Jim will review our third quarter financial results and provide an outlook for the remainder of the year.

· Then we’ll open the call for your questions.

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Software

· As I mentioned, our Qumu software revenues demonstrated strong growth year over year.

· Contracted commitments totaled $3.8 million and the backlog was $10.7 million at the end of September.

· We signed three new large customers in the third quarter. They included a global financial services provider, the Canadian division of an international consulting firm and a governmental entity in the Middle East.

· While these results demonstrate continued traction in our software business, there were several important developments in the quarter that we believe will drive significantly stronger contract bookings growth beginning in Q4.

· On September 16th, we officially changed our corporate name to Qumu and launched a new corporate identity that is reflected on outbound marketing content. As part of the effort, we have a new corporate website, qumu.com and a new stock symbol – Q-U-M-U. And to support its introduction, we did a comprehensive outreach to customers and media.

· The Qumu name and identity reflects our commitment to the rapidly growing video content management market and optimism about its contribution to the company’s future growth prospects.

· Video is becoming the new document and corporations and other enterprises need video content production, management and secure delivery. To showcase Qumu software’s differentiating capabilities, our new website features rich video content focused on use cases, customer insight, vertical markets and technology.

o We’ve had great reception to our Qumu branding initiative as demonstrated by the increase in our website traffic. The number of visits, unique visitors and page views are all up more than 80% in the second half of September compared with the first half.

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· We were also extremely excited to be recognized as a leader in enterprise video content management market in a Magic Quadrant report very recently published by Gartner.

· Our ranking in the Gartner report is important for several reasons.

o First, the report validates the market potential of enterprise video content management

o Second, it validates Qumu’s differentiation in this fast growing market. Specifically:

§ Our Secure delivery technology, be it live broadcast, streaming on-demand, or offline;

§ The Strength of our enterprise integrations;

§ Flexible deployment of our offerings and;

§ Rich Mobile Apps

· Customer reaction has been very positive, resulting in increased traction with new accounts.

· The result has been a significant increase in our pipeline. This increase, along with the maturing of our sales team investments from earlier in the year, has led us to have high expectations for Q4. We expect our contracts in the quarter to significantly exceed the level of any one of the prior three quarters.

· To support our anticipated growth, we have continued to expand our footprint. During the quarter, we hired three experienced sales reps from the industry, who joined Qumu because they recognize our differentiation and the market opportunity. We also brought in a new head of marketing to help us expand our message.

We have made a great deal of progress in establishing Qumu as a leader in enterprise video content management. We see our momentum building in the marketplace and we look forward to demonstrating our potential with a solidly improved contract bookings performance in Q4.

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Disc Publishing

· Turning now to disc publishing…

· Our revenue in Q3 was $16.7 million, a decrease of 8% from the prior year.

· Again, we saw a strong revenue performance from consumables, particularly in the retail sector.

· Hardware sales remain under pressure, as cloud based, file sharing products and mobile technologies continue to gain traction in the market.

· As we’ve mentioned before, we have a significant opportunity with the federal government that has been approved but long delayed due primarily to budget issues. We believe these opportunities are still valid, but we’re not in a position to predict anything about the timing of government actions in the near term.

· Importantly, the third quarter reflected the cost cutting efforts that we took in Q2 in our disc publishing business. This resulted in a decline in total operating expenses of over a million dollars on both a year over year and quarter over quarter basis and enhanced the profitability of the disc publishing operation, which continues to generate significant cash.

· Looking ahead, we are confident that demand for disc publishing will continue in several select markets including surveillance, media and entertainment, medical, photo retail and financial services.

· We believe that our disc publishing infrastructure is now optimized to serve these markets effectively while generating positive cash flow from operations on a consistent basis.

· As a result of the improved disc publishing profitability and stronger working capital management, our cash balance at the end of September increased $2 million from the end of the second quarter, a significant accomplishment for the Company given the ongoing investments we continue to make in our software business.

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Summary

· In closing, I am very pleased with our progress.

· Social business and video adoption in the enterprise are creating a rapidly growing market and our software has differentiated features resulting in an expanding pipeline.

· With our recent restructuring of our disc publishing operation, we are now better positioned to continue to pursue opportunities and serve this market effectively while generating an ongoing cash flow from this business.

· With that, I’d like to turn the call over to Jim.

Jim Stewart

· Thanks, Sherman.

· I will begin with a review of our P&L

· Revenues in the third quarter totaled $21.1 million compared with $20.9 million in the third quarter last year, a 1% increase. This reflected strong growth in software revenues that was mostly offset by a decrease in disc publishing revenues.

· Software revenues were $4.4 million, 59% above revenues in the third quarter of 2012, continuing the strong growth we saw in our first half results.

· Software contracted commitments were $3.8 million compared with $4.5 million last year. As Sherman stated earlier, we expect much stronger contracted commitments in this year’s fourth quarter.

· The backlog of software contracted commitments ended the third quarter at $10.7 million, down slightly from the end of last quarter.

· Disc publishing revenues totaled $16.7 million, a decrease of 8% from last year. These revenues included a significant consumables order from a retail customer in North America. Retail consumable orders are usually larger orders and their timing is difficult to predict quarter to quarter. We would expect this retail consumables demand to normalize over the next few quarters.

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· Third quarter consumable sales of printer ribbons, cartridges, and optical media were up 13%. Driving this growth was the large retail consumables order as mentioned. Service revenue including parts also increased 12% with higher maintenance contract attach rates the main driver of this growth. These recurring revenues represented 60% of total company revenues in the third quarter compared with 54% in the prior year.

· Hardware sales decreased 42% from the third quarter of 2012. Included in last year’s revenues was a large refresh order from a significant financial services customer. Excluding that sale, hardware revenues were down 17%.

· Disc Publishing international sales were down 4% from the third quarter of 2012. These sales represented 27% of total sales in the recent third quarter, compared with 29% in the third quarter of 2012.

· Compared with last year’s third quarter, currency changes had minimal impact on disc publishing revenues with positive Euro changes offsetting negative currency changes in Japan.

· Third quarter 2013 sales in Europe for disc publishing were down 2% from last year, with hardware sales down by 11% and recurring revenues up 1%.

· Disc publishing sales in Asia Pacific were up 4% from last year with Hardware sales increasing 15% and recurring revenues decreasing 3%.

Margins, Expenses, Bottom-line

· Moving down the income statement, the gross margin was 47% for the third quarter of 2013 compared with 48% last year.

· Qumu software gross margin in the third quarter was 53%. This was lower than last quarter’s 69% and lower than expected due to our third quarter deal mix which included more 3^rd party products sold as part of our solution revenue. This led to a higher cost of sales thus a lower margin. We expect this to normalize and for software gross margins to improve in the fourth quarter.

· Disc publishing gross margin was 45%. This margin is lower than last year’s 48% gross margin due to a lower value and mix of hardware revenue in this year’s third quarter. As stated earlier, third quarter 2012 hardware revenues included a large financial services refresh order that did not recur this year.

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· Excluding the impact of the third quarter 2012 non recurring charges for impairment of goodwill and intangible assets, operating expenses in this year’s third quarter were $11.0 million, compared with $12.3 million in third quarter 2012 and $12.3 million in the second quarter 2013. This improvement in opex compared to last year was the result of our cost cutting efforts implemented last quarter in the disc publishing business, a reduction in disc publishing R&D spending and lower legal fees.

· Third quarter disc publishing operating expenses totaled $5.0 million compared with $5.7 million in the second quarter and $6.4 million last year.

· Third quarter 2013 software operating expenses were $6.0 million compared with $6.6 million in the second quarter and $5.9 million last year.

· Total company R&D expenses were $2.8 million in the quarter compared with $3.0 million in the third quarter of last year. Lower disc publishing R&D headcount and project spending were the drivers of this reduction.

· Third quarter 2013 total company SG&A expenses were $8.0 million, compared with $9.1 million a year ago. This reduction is primarily due to lower disc publishing sales and marketing costs.

· Adding it all up - we generated a net loss of $1.0 million in the third quarter of 2013 compared with a loss of $42.8 million last year which included three non recurring charges. These charges related to the writeoff 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 in the third quarter of 2012 was $1.3 million.

· On a per share basis, excluding amortization charges, the net loss in the third quarter was eight cents. This compares with a loss of nine cents per share in the third quarter of last year on a comparable non-GAAP basis.

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First Nine Months 2013 Results

· Turning to a brief overview of our YTD results..

· Total company revenues were up 5% to $61.8 million compared with the prior year.

· Software revenues have increased significantly to $13.6 million, up 146% compared to last year.

· Third quarter YTD software contracted commitments total $11.6 million, an increase of about 5% from last year.

· Disc publishing revenues have declined 9% to $48.2 million with a significant decline in hardware revenue partially offset by an increase in recurring consumables and service revenues. The decline in hardware revenue is largely driven by the comparison against two large refresh orders in 2012 – one in retail photo and another in financial services that did not recur in 2013.

· Gross margin was 48% for the 2013 period vs. 48% last year.

· On a non-GAAP basis, excluding amortization, severance expenses and one time charges, the loss per share was 61 cents through the nine months of 2013 compared with a loss of 46 cents last year.

Cash

· Now turning to our cash position …

· Cash and marketable securities totaled $48.4 million at September 30, 2013 compared with $46.1 million at the end of June.

· During the third quarter, we generated approximately $2.5 million in cash from operations compared with a cash usage of$1.9 million in the second quarter. This increase in positive cash generation reflected improved profitability from our disc publishing business and stronger working capital management including lower receivables and inventory levels.

· Together, receivables and inventory were down by $1.2 million at September 30 compared with the level at the end of June.

· Capital expenditures totaled $300,000 in the quarter.

· Year to date, cash used in operations was approximately $400 thousand with capital expenditures of $873,000.

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· We did not buy back any shares of Qumu stock during the third quarter. The Company has approximately 778,000 shares remaining on its repurchase authorization and may repurchase shares from time to time during the year depending on market conditions.

4Q and 2013 Revenue Guidance

· Turning now to our outlook on revenues for the fourth quarter and full year 2013…

· We expect revenues for the fourth quarter to be between $18 and $20 million.

· Our annual revenue outlook remains unchanged.

· On a consolidated basis we expect annual 2013 revenues to grow compared to 2012.

· We continue to expect software revenues in 2013 to grow at a rate in excess of 70% compared with 2012.

· This growth in software revenues will be partially offset by a decline in Disc Publishing revenues.

· For the year, we expect cash used in operations to remain in the low single digit millions.

· That concludes our formal remarks.

· Now Sherman and I would be happy to answer any questions. Operator, could you please open up the line for Q&A?

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