Q3 2022 Qumu Corp Earnings Call
[music].
Yeah.
Welcome to <unk> third quarter 2022 conference call My name is Kurt right.
I will be your operator this afternoon joining.
Joining us on <unk> arc, <unk>, President and CEO Rose Bentley, CFO , Tom Kruger, and Matt Glover from Gateway Investor Relations.
At this time all participant lines are in listen only mode. After the speaker presentation, there will be a question and answer session.
To ask a question. During this session you will need to press star one one on your telephone and that will enter you into the queue I.
I would now like to turn the call over to Matt Glover, Sir you may begin.
Thanks, Curt and good afternoon, everyone. After the market closed today <unk> issued a press release announcing its financial results for the third quarter ended September 32022.
A copy of which is available on 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.
But if you 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. These forward looking statements reflect management's opinion 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 remove SEC filings, specifically its Form 10-K, and 10-Q financial results press release for a more detailed description of risk factors that may affect the company's results.
During the call today management will discuss adjusted EBITDA, a non-GAAP financial measures 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 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.
Isolation from a substitute for or superior to GAAP results.
The company courage, you to consider all measures when analyzing <unk> 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 <unk> website.
Now I would like to turn the call over to <unk>, President and CEO Rose Battle Road.
Thank you, Matt and good afternoon, everyone.
Thank you for joining us today to start off early in our third quarter I completed the proverbial first 100 days of current CEO .
As the well known single time flies when you are helping fund.
Really enjoying collaborating with our team driving meaningful business value for our partners and our customers alike.
My first hundred days focus on continuing to execute on cooler Scott transformation strategy, delivering a best in class customer experience and doubling down on our partner led go to market motion.
The strategic investments, we made in our customers and our partner ecosystem over the last 18 months continue to yield strong returns.
Additionally, retention and renewals.
Strong during the quarter with renewals coming from Unicredit.
Clearinghouses counting football club and pediatric oncology Center Princess Maxim centrally.
From a financial standpoint during Q3, we built on the momentum we established in the first half of 2022 and delivered solid growth across our key metrics, including SaaS revenue SaaS.
Ias reoccurring revenue and SaaS revenue as a percentage of our top line.
Most notably we generated a 6% increase in SaaS revenue and a 7% increase in SaaS annual recurring revenue or <unk>.
As well as we expanded our SaaS revenue as a percentage of reoccurring revenue to 62%.
And we were able to deliver these growth results, while dramatically, reducing our opex and cash usage.
Overall coolers, improving financial results results in strong SaaS kpis reflect the increasing success momentum of our partner led sales strategy and our current customers growing our investment with <unk> as their trusted provider of live and asynchronous video content.
I'll now turn the call over to Tom to provide more details on our Q3 financial performance and key metrics Tom.
Thanks, Ross, it's a pleasure to be speaking with you today.
Similar to last quarter I will expand on a few metrics that rooms highlighted which are also included in our earnings release that we published after market close.
The metrics that we use to measure the success of our SaaS transformation continue to move in the right direction and reflect our team's continued execution of our growth strategy.
As we enter the final stages of our cloud transformation, we still believe these metrics most accurately reflect our performance and business going forward.
As Ralph highlighted SaaS revenue for Q3, 2022 increased 6% to $2 8 million.
Compared to $2 6 million in Q3 2021.
<unk> for Q3 increased 7% year over year to $13 5 million and 1% sequentially from $13 3 million in Q2 2022.
SaaS revenue for Q3 2022 accounted for 63%.
Recurring revenue up from 61% in the prior quarter and 52% in Q3 2021.
We are on track for SaaS recurring revenue as a percentage of total recurring revenue to be approximately 65% by the end of this year and approximately 75% by the end of 2023.
As a percentage of total revenue.
SaaS revenue accounted for 51% compared to 54% in Q2, 2022, and 41% in Q3 2021.
Our SaaS retention rates remained strong with a gross retention rate of 92% at quarter end and our net retention rate was 100% at the end of Q3.
Now moving down the income statement.
For the third quarter of 2022, our gross margin was 77, 5%.
From 75, 4% in Q2 and 76.0% in Q3 2021.
The improvement in gross margin was due to better margins.
<unk> revenue recognized compared to Q2 2022.
A higher percentage of SaaS revenue contributing to the overall sales mix compared to Q3 2021.
And improved utilization of professional services personnel.
We expect to maintain gross margins in the mid <unk> for the balance of 2022 and first half of 2023.
Moving on to operating expenses.
As Ross alluded to kudos transformation, thus far has not only been focused on our SaaS journey, but also on optimizing our cost structure and realizing efficiencies to achieve cash flow breakeven.
We're really encouraged by our success in these key areas and the fact that we've been able to drive down.
Our opex over the last several quarters.
Along that line Opex in the third quarter of 2022 was $6 2 million down, 12% sequentially and 30% year over year.
We anticipate that our normalized opex run rate in the coming quarters will be approximately $6 $5 million per quarter.
Proactive cost rationalization has been a consistent highlight during the first nine months of 2022, enabling us to improve quarterly cash used in operations each quarter from $4 9 million in Q1.
$3 $7 million in Q2, and $1 4 million in Q3.
While we've made great strides improving our cash used in operations.
We'll continually look for ways to further optimize our cost profile without sacrificing our ability to execute our growth roadmap.
Looking at our profitability measures adjusted EBITDA non-GAAP measure in Q3, 2022 totaled a loss of $1 6 million at.
That improvement from a loss of $3 1 million in Q2 2022 and.
And a loss of $3 5 million in Q3 2021.
A reconciliation of adjusted EBITDA to net loss a GAAP measure.
It's included in our earnings releases for the respective periods.
Net loss in Q3, 2022 totaled $1 4 million or.
Or <unk> <unk> loss per basic and diluted share.
This compares to a net loss of $2 6 million or.
<unk> net loss per basic and diluted share for Q2 2022.
And a net loss of $3 7 million or 21 loss per basic and diluted share in Q3 2021.
Shifting gears to the balance sheet.
At quarter end, we had $6 zero million.
Cash and cash equivalents, including $1 2 million borrowed.
From our line of credit.
We continue to tightly manage cash as seen through a reduction in cash usage over the course of 2022.
Expect to continue to reduction in net cash usage over the coming quarters as we realized further benefits from our cost reduction measures and our high velocity lower cost partner led sales model.
That concludes my prepared remarks, I'll turn it back over to Ruth to discuss our strategy key partnerships and our outlook.
<unk>.
Thanks, Tom over the past several quarters, our theme as a company has done validation their execution.
Our team's consistent operational execution has validated our strategy and enabled us to enter the final phase of our SaaS transformation journey ahead of plan.
Our channel partner strategy has been validated by the volume of opportunities, we are seeing as well as the rate of which we are closing new business.
In fact, our new logo count for the first nine months of the year exceed all new logos, we secured in 2021, and we continue to see over 80% of our new bookings being sourced by our partners.
Partners, such as British Telecom and <unk> were key contributors to our new logo additions in Q3, which.
Which included a multinational security chemical company and a global professional services firm.
We also secured a win with a unit at the department of event through our partnership with customer, which we believe will continue to lead to additional wins within the government sector.
In addition to the exciting customer wins that we've secured in the quarter, we continue to advance our partnership with AT&T as.
As I mentioned on our last call, we met with AT&T leadership in August to explore further opportunities to strengthen our relationships.
I am excited to report that we will be working together with AT&T to expand our go to market effort, but can live.
With video engagement platform.
This multifaceted program will provide AT&T with numerous value add functions, including product management marketing Communications channel marketing sales operations and professional services for the launch of its <unk> powered enterprise video as a service offering.
We have already received preliminary acceptance for several elements within the program and expect to see resulting revenue and purchase orders as soon as next quarter.
Additionally, we further evolved our SaaS enterprise by taking an obvious next step collaborating with Google to deliver our Kumar video engagement platform to Google cloud marketplace.
By combining our industry, leading expertise with google's massive engagement, we expect customers to derive enhance value from this partnership.
We are in the early days of our partnership with Google, but we are encouraged by our ability to share customers and deliver targeted account mapping and build pipeline together for 2023.
An exciting trend that we have seen over the course of 2022 is an increasing trust and Docomo brand, providing strength and support for our growth initiatives.
As we head into Q4, our pipeline for renewals and new customers is incredibly strong and building and being fueled by continued momentum in our partner led strategy.
Many of the renewals we completed in Q3 as well as Q4 renewals include an expansion of our customer relationships.
Customers are increasing.
Their internal usage of cool platform, resulting in a broader network of technology partners and new enterprise use cases for us to target going forward.
A growing number of renewals secured in Q3.
For multi year contracts, and we expect future renewal policies.
In fact for the first nine months of 2022, three year contracts accounted for nearly 20% of our renewals.
These long term contracts reflect the confidence our customers have in our cloud based solutions and unmatched level of customer service.
During a recent quarterly business review with one of our clients. They remarked you simply will not let it fail.
This statement is a powerful testament to the standard of care and quality of service that we hold ourselves accountable to current coupon.
Looking ahead to Q4, we expect to see meaningful contributions from our valued partners British telecom and collect it.
In December of last year, we announced our partnership with collective along with the launch of the <unk> partner program and it is exciting to see the ongoing synergies blossom from this partnership.
The right partners are accelerating coolers entry into new markets, strengthening our competitive positioning and teeing up repeat business.
The third quarter with key and building the trust that fuels, our customer engagements, we successfully brought down our cash usage from operations further stabilizing our runway as we complete the final stage of our cloud transformation and work toward cash flow breakeven.
Going forward our plan for the rest of 2022 is to ensure that the last of our marquee customers. Our skus, we transitioned to the kuma cloud platform and double down on our momentum from the partner led strategy.
We expect to continue to monetize.
Monetize our partner relationships and discover synergies that will ultimately be reflected in our bottom line results.
As I shared in my most recent CEO dispatch our three year vision for <unk> is to achieve $50 million in revenue as a profitable and predictable company by the end of 2025.
The strategic investments, we have made into the business over the past several years position us to now focus on scaling outwardly and promoting our platform through our network of partners and collaborators.
The benefits of our transformation will become increasingly evident in growth in reoccurring revenue later this year and into 2023.
We will now take your questions Kurt please provide the appropriate instructions.
Thank you at this time, we will conduct a question and answer session as a reminder.
To ask a question you will need to press star one on your telephone and wait for your name to be announced please standby.
We compile the Q&A roster.
And we have some questions coming in right now.
And our first question will come from Jeff Van <unk>.
With.
Craig Hallum Capital group.
Ahead Sir.
Okay.
Hey, guys. Thanks for the call. This is Daniel on for Jeff.
Just a quick question on the pipeline just curious as you are talking about the opportunities with partnerships can you give us any sense for how the pipeline has evolved in size and scope versus say three six months ago.
Yes, certainly.
Happy to answer that thank you for the question.
As we explore the pipeline as we think about what we're building around the enterprise. We continue to see enterprise brands want to explore and invest in video. So the expectation of the enterprise consuming video and growing that pipeline. We are still continuing to see when we reflect back over a year ago, we had grown our pipeline over 70% and if you even look.
At even just the past six months, we're continuing to see that pipeline evolved and set us up for success.
Q4 and into 2023.
Yes.
Thank you and then just on that.
<unk>.
The splits between revenues.
Recurring versus.
Sorry, excuse me how box demand out here.
Just on subscription versus broader growth can you give us a sense.
How we should be thinking about subscription growth moving forward just sort of broadly.
Yes, certainly.
With description growth has been if you look at just like the SaaS overall growth in subscription growth will be the number one priority focus growth. So if you think of a SaaS we have been seeing a decline, but it's because we're going through the cloud transformation and we're converting those into subscription based business. So I would expect the subscription base to moderately grow.
It has been we don't expect to see a decline in that growth, we expect to see that we at least maintain if not grow moderately through 2020.
To the end of the year end into 2023.
Thank you that's all for now.
Thank you for the questions.
Thank you so much and we have another question here.
Just pulling it out of the queue.
Our next question comes from.
Paul Lonnie Vivek Kana Khan.
From J M N investment Research group go ahead Sir.
Yes.
Hi, I'm Vivek on behalf of Mike Latimore I have about couple of questions here. The first one is.
Have you guys seen any themes elongation given microeconomic concerns.
I'll take that one so we are.
<unk> to see digital transformation will be a priority for the enterprise. We are also continuing to see that the power of the incumbent is one of the reasons our redemption renewal rates are so strong.
Is there I think as we start to examine how enterprises will behave going forward I think we're all watching and acknowledging the uncertainty in the current market and that 2023 need to be de risk due to some of the stabilization in the demand.
But at this point today, we are not seeing the slow.
But we expect as I said to start being very smart and acknowledge I think some of the uncertainty in the market that you can start to reflect in Q2 2023 and our planning.
Great. My second question is.
What have been the biggest use cases in demand.
Yeah. So my far right, it's short form video, so asynchronous content or consumption of video.
Across our customer base, 100% of our customers consume video is concurrently.
And there's a lot more user generated content because of that right because they are consuming and creating content on their own. We continue to see of course, a decent size of our customers leverage our lives.
Events and live communication.
Becoming less and less because I think people are understanding that the the blended workday is changing and that people expect to consume content when they want to consume it and especially when you're trying to manage a lot of the global audiences.
Great.
One last question.
Please can you give.
Hello Am I audible.
Yes, I can hear you yes.
The last question is did you see any customers churn off on your on premise software to third party SaaS providers.
Did we see any on premise churn was that the question.
Yeah.
On premise software services for on premise software services.
Yeah, so coming into the year, we continue to forecast a decline in that maintenance revenue and in that on Prem revenue. So the short answer would be yes, we do see customers on the on Prem business choose to either stay on premise.
Not embrace the digital transformation and move to the cloud or <unk>.
Continue to potentially choose or go with another vendor that is something that we continue to see as we transform to the cloud.
Great.
That's it from my side. Thank you.
Thank you.
Thank you so much for your questions. At this time, we will conclude the company's question and answer session. If you have a question that's not taken please contact <unk> IR team at Q U M U at Gateway IR, That's G E W. A y.
<unk> Dot com now I would like to turn the call back over to MS. Li for closing remarks.
Thanks, Kurt and thank you everyone for joining our call. This afternoon. If you haven't done so already I encourage you to follow criminal on Twitter or Linkedin to automatically receive my ongoing CEO dispatches for better color on up to date initiatives underway here at come up back over to Kurt.
Thank you for joining us today.
This will end the conference.
The third.
<unk> third quarter Conference call you may now disconnect.
[music].
[music].
[music].
Welcome to <unk> third quarter 2022 conference call. My name is Kurt right I will be your operator this afternoon.
Joining us on crew moves arc, <unk>, President and CEO Rose Bentley, CFO , Tom Kruger and Matt Glover from Gateway Investor Relations.
At this time all participant lines are in 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 one on your telephone and that will enter you into the queue.
I would now like to turn the call over to Matt Glover, Sir you may begin.
Thanks, Curt and good afternoon, everyone. After the market closed today accumulate issued a press release announcing its financial results for the third quarter ended September 32022 copies.
A copy of which is available on Investor Relations section of the company's web site.
During today's call management will make certain statements with respect to the company's expected financial results.
If you 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. 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 <unk> SEC filings, specifically its Form 10-K, and 10-Q financial results press release for a more detailed description of risk factors that may affect the company's results.
During the call today management will discuss adjusted EBITDA, a non-GAAP financial measures 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 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.
Isolation from a substitute for or superior to GAAP results.
The company encourage you to consider all measures when analyzing <unk> performance I.
I'd like to remind everyone that this call is being recorded and will be made available for replay via a link available in the Investor Relations section of <unk> Web site.
Now I would like to turn the call over to <unk>, President and CEO Rose Battle Road.
Thank you, Matt and good afternoon, everyone and.
And thank you for joining us today to start off early in our third quarter I completed the proverbial first 100 days of current CEO .
As the well known thing goes time flies when you're having fun.
Certainly enjoying collaborating with our team driving meaningful business value for our partners and our customers alike.
First time today is focused on continuing to execute on pure Scott transformation strategy, delivering a best in class customer experience and doubling down on our partner led go to market motion.
The strategic investments, we made in our customers and our partner ecosystem over the last 18 months continue to yield strong returns.
Additionally, retention and renewals were especially strong during the quarter with renewals coming from Unicredit.
Our Manhattan County Football club, and pediatric Oncology Center Princess Maxim Centrum.
From a financial standpoint during Q3, we built on the momentum we established in the first half of 2022 and delivered solid growth across our key SaaS metrics, including SaaS revenue SaaS.
SaaS reoccurring revenue and SaaS revenue as a percentage of our top line.
Most notably we generated a 6% increase in SaaS revenue and a 7% increase in SaaS annual recurring revenue or <unk>.
As well as we expanded our SaaS revenue as a percentage of reoccurring revenue to 63%.
And we were able to deliver these growth results, while dramatically, reducing our opex and cash usage.
Overall coolers, improving financial results results in strong SaaS kpis reflect the increasing success momentum of our partner led sales strategy and our current customers growing our investment with <unk> as their trusted provider of live and asynchronous video content.
I'll now turn the call over to Tom to provide more details on our Q3 financial performance and key metrics Tom.
Thanks, Ross, it's a pleasure to be speaking with you today.
Similar to last quarter I will expand on a few metrics that roads highlighted which are also included in our earnings release that we published after market close.
The metrics that we use to measure the success of our SaaS transformation continue to move in the right direction and reflect our team's continued execution of our growth strategy.
As we enter the final stages of our cloud transformation, we still believe these metrics most accurately reflect our performance and business going forward.
As rose highlighted SaaS revenue for Q3, 2022 increased 6% to $2 8 million.
Compared to $2 6 million in Q3 2021.
<unk> for Q3 increased 7% year over year to $13 5 million and 1% sequentially from $13 3 million in Q2 2022.
SaaS revenue for Q3 2022 accounted for 63%.
Recurring revenue up from 61% in the prior quarter and 52% in Q3 2021.
We are on track for SaaS recurring revenue as a percentage of total recurring revenue to be approximately 65% by the end of this year and approximately 75% by the end of 2023.
As a percentage of total revenue.
SaaS revenue accounted for 51% compared to 54% in Q2, 2022, and 41% in Q3 2021.
Our SaaS retention rates remained strong with the gross retention rate of 92% at quarter end and our net retention rate was 100% at the end of Q3.
Now moving down the income statement.
For the third quarter of 2022, our gross margin was 77, 5% up.
From 75, 4% in Q2 and 76.0% in Q3 2021.
The improvement in gross margin was due to better margin.
As revenue recognized compared to Q2 2022.
A higher percentage of SaaS revenue contributing to the overall sales mix compared to Q3 2021.
And improved utilization of professional services personnel.
We expect to maintain gross margins in the mid <unk> for the balance of 2022 and first half of 2023.
Moving on to operating expenses.
As Ross alluded to kudos transformation, thus far has not only been focused on our SaaS journey, but also on optimizing our cost structure and realizing efficiencies to achieve cash flow breakeven.
We're really encouraged by our success in these key areas and the fact that we've been able to drive down our opex over the last several quarters.
Along that line Opex in the third quarter of 2022 was $6 2 million.
Down, 12% sequentially and 30% year over year.
We anticipate that our normalized opex run rate in the coming quarters will be approximately $6 $5 million per quarter.
Proactive cost rationalization has been a consistent highlights during the first nine months of 2022, enabling us to improve quarterly cash used in operations each quarter from $4 9 million in Q1.
$3 $7 million in Q2, and $1 4 million in Q3.
While we've made great strides improving our cash used in operations, we will continually look for ways to further optimize our cost profile without sacrificing our ability to execute our growth roadmap.
Looking at our profitability measures adjusted EBITDA non-GAAP measure in Q3, 2022 totaled a loss of $1 6 million an.
That improvement from a loss of $3 1 million in Q2 2022 and.
And a loss of $3 $5 million in Q3 2021.
A reconciliation of adjusted EBITDA to net loss a GAAP measure.
As included in our earnings release for the respective periods.
Net loss in Q3, 2022 totaled $1 4 million or.
Or <unk> <unk> loss per basic and diluted share.
This compares to a net loss of $2 6 million or.
Or <unk> 15, net loss per basic and diluted share for Q2 2022.
And a net loss of $3 $7 million or 21 set loss per basic and diluted share in Q3 2021.
Shifting gears to the balance sheet.
At quarter end, we had $6 zero million.
Cash and cash equivalents.
Including $1 2 million borrowed.
From our line of credit.
We continue to tightly manage cash as seen through a reduction in cash usage over the course of 2022.
We expect a continued reduction in net cash usage over the coming quarters as we realized further benefits from our cost reduction measures and our high velocity low cost partner led sales model.
That concludes my prepared remarks, I'll turn it back over to Ruth to discuss our strategy key partnerships and our outlook.
Gross.
Thanks, Tom over the past several quarters our team as a company has been consolidation there execution. Our teams consistent operational execution has validated our strategy and enabled us to enter the final phase of our SaaS transformation journey ahead of plan.
Our channel partner strategy has been validated by the volume of opportunities, we are seeing as well as the rate of which we are closing new business.
In fact, our new logo count for the first nine months of the year exceed all new logos, we secured in 2021, and we continue to see over 80% of our new bookings being sourced by our partners.
Partners, such as British Telecom and <unk> were key contributors to our new logo additions in Q3.
Which included a multinational security chemical company and a global professional services firm.
We also secured a win with a unit of the department of defense through our partnership with customer, which we believe will continue to lead to additional wins within the government sector.
In addition to the exciting customer wins that we've secured in the quarter. We continued to advance our partnership with AT&T.
As I mentioned on our last call we met with AT&T leadership in August to explore further opportunities to strengthen our relationships I'm excited to report that we will be working together with AT&T to expand their go to market effort, but can live with.
With video engagement platform.
This multifaceted program will provide AT&T with numerous value add functions, including product management marketing communication channel marketing sales operations and professional services for the launch of the tumor powered enterprise video as a service offering.
We have already received preliminary acceptance for several elements within the program and expect to see a resulting revenue and purchase orders as soon as next quarter.
Additionally, we further evolved our SaaS enterprise by taking all these next step collaborating with Google to deliver our Kumar video engagement platform to Google cloud marketplace.
By combining our industry, leading expertise with google's massive engagement, we expect customers to derive enhance value from this partnership.
We are in the early days of our partnership with Google, but we are encouraged by our ability to share customers and deliver targeted account mapping and build pipeline together for 2023.
An exciting trend that we have seen over the course of 2022 is an increasing trust in the cooler brand, providing strength and support for our growth initiatives.
As we head into.
Q4, our pipeline for renewals and new customers are incredibly strong and building and being fueled by continued momentum in our partner led strategy.
Many of the renewals we completed in Q3 as well as Q4 renewals include an expansion of our customer relationships.
<unk> are increasing.
Their internal usage of coupon, resulting in a broader network of technology partners and new enterprise use cases for us to target going forward.
A growing number of renewals secured in Q3.
We're for multiyear contracts and we expect future renewal policies.
In fact for the first nine months of 2022, three year contracts account for nearly 20% of our renewals.
These long term contracts reflect the confidence our customers have in our cloud based solutions and unmatched level of customer service.
During the recent quarterly business review with one of our clients. They remarked you simply will not let them fail.
This statement is a powerful testament to the standard of care and quality of service that we hold ourselves accountable to you here at Goldman.
Looking ahead to Q4, we expect to see meaningful contributions from our valued partners British telecom and collected.
December of last year, we announced our partnership with collective along with the launch of the <unk> partner program and it is exciting to see the ongoing synergies blossom from this partnership.
The right partners are accelerating coolers entry into new markets, strengthening our competitive positioning and teeing up repeat business.
The third quarter with key and building the trust that fuels, our customer engagements. We successfully brought down our cap you should from operations further stabilizing our runway as we complete the final stage of our cloud transformation and work toward cash flow breakeven.
Going forward our plan for the rest of 2022 is to ensure that the last of our marquee customers. Our skills, we transitioned to docomo cloud platform and double down on our momentum from the partner led strategy.
We expect to continue to monetize.
Monetize our partner relationships and discover synergies that will ultimately be reflected in our bottom line results.
As I shared in my most recent CEO dispatch our three year vision for <unk> is to achieve $50 million in revenue as a profitable and predictable company by the end of 2025.
The strategic investments, we have made into the business over the past several years position us to now focus on scaling outwardly and promoting our platform through our network of partners and collaborators.
The benefits of our transformation will become increasingly evident in growth in reoccurring revenue later this year and into 2023.
We will now take your questions Kurt please provide the appropriate instructions.
Thank you at this time, we will conduct a question and answer session as a reminder.
To ask a question you will need to press star one on your telephone and wait for your name to be announced.
Please standby.
We compile the Q&A roster.
And we have some questions coming in right now.
And our first question will come from Jeff Van <unk>.
With.
Craig Hallum Capital Group go ahead Sir.
Okay.
Hey, guys. Thanks for the call. This is Daniel on for Jeff.
Just a quick question on the pipeline just curious as you're talking about the opportunities with partners can you give us any sense for how the pipeline has evolved in size and scope with the phase III six months ago.
Yes, certainly.
Happy to answer that thank you for the question.
We explore the pipeline as we think about what we're building around the enterprise, we continue to see enterprise brands want to explore and invest in video. So the expectation of the enterprise consuming video and growing that pipeline. We are still continuing to see when we reflect back over a year ago, we had grown our pipeline over 70% and if you even look.
Even just the past six months, we're continuing to see that pipeline evolved and set us up for success.
Q4 and into 2023.
Okay.
Thank you and then just on that.
Yeah.
The splits between revenues.
Recurring versus.
<unk>.
Oh, sorry, excuse me got lost in my notes here.
Just on subscription versus broader goes can you give us a sense.
How we should be thinking about subscription growth moving forward just sort of broadly.
Yes, certainly so first subscription growth has been if you look at just like the SaaS overall growth in subscription growth will be the number one priority focus growth. So if you think of a SaaS. We continued to decline, but it's because we're going through the cloud transformation and we're converting those into subscription based business. So I would expect the subscription base.
Moderately grill.
We don't expect to see a decline in that growth, we expect to see that at least maintain if not grow moderately through 2020.
The end of the year and into 2023.
Thank you that's all for now.
Thank you for the questions.
Thank you so much and we have another question here.
Just pulling it out of the queue.
Our next question comes from.
Paul Lonnie Vivek Kana com.
J M N investment Research group go ahead Sir.
Hi, I'm Vivek on behalf of Mike Latimore I have about couple of questions here.
First one is.
Have you guys seen any sales elongation given microeconomic concerns.
I'll take that one so we are continuing to see digital transformation will be a priority for the enterprise. We are also continuing to see that the power of the incumbent is one of the reasons our redemption of renewal rates are so strong.
Is there I think as we start to examine how enterprises will behave going forward I think we're all watching and acknowledging the uncertainty in the current market and the 2023 need to be derisked due to some of the stabilization in the demand.
But at this point today, we are not seeing the slow, but we expect as I said to start being very smart and acknowledge I think some of the uncertainty in the market as we start to reflect in Q2 2023 and our planning.
Great. My second question is.
What have been the biggest use cases in demand.
Yeah. So my far right, it's short form video, so asynchronous content or consumption of video.
Across our customer base, 100% of our customers consume video is concurrently.
And there's a lot more user generated content because of that right, because they're consuming and creating content on their own. We continue to see of course, a decent size of our customers leverage our lives.
Events and live communication, but that's becoming less and less because I think people are understanding that the the blended workday is changing and that people expect to consume content when they want to consume it and especially when you are trying to manage a lot of the global audiences.
Great.
One last question.
Please can you give.
Hello Am I audible.
Yes, I can hear you yes.
The last question is did you see any customers churn off on your on premise software to third party SaaS providers.
Did we see any on premise churn was that the question.
Yeah.
Premise software services for on premise software services.
Yeah, so coming into the year, we continue to forecast a decline in that maintenance revenue and then that on Prem revenue. So the short answer is yes, we do see customers on the on Prem business choose to either stay on premise.
Not embraced the digital transformation and move to the cloud or <unk>.
Continue to potentially choose or go with another vendor that is something that we continue to see as we transform to the cloud.
Great.
That's it from my side. Thank you.
Thank you.
Thank you so much for your questions. At this time, we will conclude the company's question and answer session. If you have a question that's not taken please contact <unk> IR team at Q U M U at Gateway IR, That's G E W. A y.
<unk> Dot com now I'd like to turn the call back over to MS. Li for closing remarks.
Thanks, Kirk and thank you everyone for joining our call. This afternoon. If you haven't done so already I encourage you to follow criminal on Twitter or Linkedin to automatically receive my ongoing CEO dispatches for better color on up to the initiatives underway here at come up back over to Kurt.
Thank you for joining us today.
This will end the conference.
The third.
Third quarter Conference call you may now disconnect.