• Revenue: $72.6 million, up approximately 1% year over year and 3% from the prior quarter.
• GAAP Gross Margin: 43.8%, an increase of 320 basis points year over year and 230 basis points quarter over quarter.
• Adjusted EBITDA: Positive $4.7 million, a $7.3 million improvement year over year and $5 million sequentially.
• Subscription ARR: Increased 29% year over year to $21.3 million.
• Non-GAAP Operating Expenses: $30.1 million, a 6% reduction year over year.
• GAAP Net Loss: $71.4 million, including a non-cash charge of $61.6 million related to warrant liabilities.
• Cash and Cash Equivalents: Approximately $20.6 million at the end of the quarter.
• Outstanding Debt: $105.9 million in term debt and $37.5 million in revolver debt.
• Secondary Storage Revenue: Grew 15% year over year.
• Annual Recurring Revenue (ARR): $141 million, representing 49% of total revenue.

• Warning! GuruFocus has detected 8 Warning Signs with QMCO.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Quantum Corp (NASDAQ:QMCO) reported a sequential increase in revenue to $72.6 million, surpassing the midpoint of guidance.
• The company achieved a GAAP gross margin of 43.8%, up 230 basis points quarter over quarter.
• Adjusted EBITDA was a positive $4.7 million, marking a $5 million improvement from the previous quarter.
• Subscription ARR increased by 29% year over year to $21.3 million, with over 90% of new sales being subscription-based.
• Quantum Corp (NASDAQ:QMCO) secured significant deals, including a large multi-million dollar contract with a top European retailer and a seven-figure deal with the Japanese Research Informatics Institute.

Negative Points

• Quantum Corp (NASDAQ:QMCO) reported a GAAP net loss of $71.4 million, impacted by a non-cash charge related to warrant liabilities.
• Supply chain lead times remain extended, which could impact future performance.
• The company continues to face manufacturing headwinds and potential tariff impacts.
• Outstanding debt remains high at $133 million, despite efforts to reduce it.
• The company is still working towards becoming cash flow positive and debt-free, indicating ongoing financial challenges.

Q & A Highlights

Q: Can you provide more details about the Standby Equity Purchase Agreement with Yorkville Advisors and its impact on Quantum's strategy? A: Jamie Lerner, CEO, explained that the agreement is a tool for raising capital efficiently, aimed at achieving debt-free status, stopping cash burn, and transitioning to cash production. The company has not yet announced specific actions regarding the agreement, and decisions will be made in consultation with the Board and financial advisors.

Q: Are the temporary manufacturing headwinds affecting your guidance related to previous issues, or are there new factors at play? A: Jamie Lerner, CEO, noted that the headwinds are due to long lead times for new i7 product parts and potential tariff impacts. The company is monitoring geopolitical factors and expects to be at the higher end of their range if conditions remain stable.

Q: Can you elaborate on the large US federal deal and its impact on your product portfolio? A: Jamie Lerner, CEO, highlighted that the deal involved high-margin, differentiated products, particularly in cybersecurity and shipboard systems. The company has seen growth in national laboratories and replicated systems for coalition nations, contributing to a 54% year-over-year increase in federal business.

Q: Is there potential for further cost reductions, or have you reached the maximum cost takeout? A: Kenneth Gianella, CFO, stated that while the majority of cost reduction efforts are complete, there is always room for optimization. The company aims to maintain operating expenses around $30 million per quarter.

Q: What is the demand trajectory for your key products, and which areas are driving growth? A: Jamie Lerner, CEO, reported strong demand in data protection, particularly with the DXi portfolio, and highlighted the success of the new i7 tape product. The company is also seeing growth in Myriad and ActiveScale, with a focus on both primary and secondary storage solutions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.