Quantum Corporation (QMCO) on Q3 2021 Results - Earnings Call Transcript
Operator: Good afternoon, everyone, and thank you for participating in today’s Conference Call to discuss Quantum’s Financial Results for the Third Quarter of its Fiscal Year 2021. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to Leanne Sievers with Shelton Group. Leanne Sievers: Good afternoon. And thank you for joining today’s conference call to discuss Quantum’s third quarter fiscal 2021 financial results. I’m Leanne Sievers, President of Shelton Group, Quantum’s Investor Relations firm. Joining me today are Jamie Lerner, Chairman and CEO; and Mike Dodson, CFO. Jamie Lerner: Thank you, Leanne, and thank you all for joining us on today’s call. Earlier today, we announced very solid results for our fiscal third quarter, with revenue exceeding our guidance and demonstrating our second consecutive quarter of sequential growth coming off the COVID related lows in the first fiscal quarter. Also, as outlined in the press release, we expect next quarter revenues to be well over the current street consensus and sequentially flat and what is typically a seasonally weak quarter. I’m encouraged by the progress we were making in our transformational growth initiatives, as well as the gradual recovery we are seeing in some of our core vertical markets. Our results in the third quarter reflected a combination of factors, including initial recovery in our core media and entertainment and data protection businesses, as well as sequential and year-on-year growth in new use cases and markets driven by new product introductions and our recent acquisitions. I’ll talk about some of these highlights in a moment. We also made significant progress during the quarter in terms of advancing our strategy and vision to be the leader in video and unstructured data solutions. During the quarter, we expanded our portfolio of solutions to store, manage and protect unstructured data across its lifecycle, while advancing our transition from a hardware centric business that is representative of a one-time purchase to a software and solutions-oriented company with a recurring revenue model. In November, we introduced StorNext 7, our altering file system ATFS and an expanded ActiveScale object storage portfolio, all of which are targeted to be available on a subscription basis. StorNext 7 is the latest version of our award winning file system. We’ve added new features so that our customers can leverage the performance of NVMe storage to speed up production, reduce data center costs and simplify their network infrastructure. We’ve also made StorNext 7 easier to manage with a streamlined and simplified user interface. Our ATFS network attached storage platform offers new levels of visibility into data by integrated data classification. It is easy to deploy, easy to use and prospects can download and install ATFS to trial it and see how it can help them better manage their valuable file data. We also expanded our ActiveScale product line with new models and new features to help customers secure their data against ransomware and other forms of cyber attacks. Although in the very early stages of ramp up with customers, we are encouraged by the early traction we are seeing in fiscal Q3 from these new products. Mike Dodson: Thank you, Jamie. Welcome to everyone who has joined our call today. As Jamie mentioned in his opening comments, our third fiscal quarter 2021 demonstrates the continued sequential revenue growth for the second consecutive quarter from the COVID related low reported in the March 2020 quarter. Revenue increased 14% sequentially to $98 million, exceeding our guidance of $91 million to $95 million, compared to $85.8 million in the previous fiscal quarter. Revenue growth in the quarter was driven by sequential increases across the revenue categories on our primary and secondary storage systems, royalty, devices and media. This reflects a broad base recovery across our traditional market verticals, combined with increasing contribution from our new products as our software strategy is resonating with customers. We are also encouraged by the early signs of a recovery in our media and entertainment business. Keeping in mind, the year-to-date revenue is running just over half of last year’s level for the same period. This reflects the significant impact COVID has had on this end market segment. Gross margin in the third quarter was 43.1%, compared to 45.1% in the prior quarter and 45.6% last year. The sequential and year-over-year decline is primarily due to product mix, with product revenues up 24% sequentially, and to a lesser extent, lower contribution from service and royalty revenues on a year-over-year basis. GAAP operating expenses in the third quarter increased $1 million to $36.2 million or 36.9% revenue, compared to $35.2 million or 41.1% of revenue in the prior quarter and $35.4 million or 34.3% of revenue in the year ago period. Jamie Lerner: Thanks, Mike. In summary, this was a very solid quarter for Quantum, the second consecutive quarter of growth and the second quarter of exceeding guidance. We demonstrated significant progress toward our transformational initiatives through our business sequentially both in our core markets and outside of our core markets and added key new products to our portfolio to drive software and recurring revenue growth. With that, we will now take any questions you may have. Operator? Operator: Your first question from the phone lines is coming from Craig Ellis. Your line is live. Craig Ellis: Thanks for taking the questions and congratulations on the strong results and outlook guys. Just a housekeeping item to start, Mike versus the fiscal third quarter $93 million guidance midpoint, where was the primary source of upside in the different businesses? And then I think Jamie mentioned and you mentioned that the fiscal fourth quarter is typically seasonally weaker. So given that you’re outperforming that what are some of the gifts and takes across either customer groups or different product groups? Mike Dodson: Yeah. Relative to our guidance, as we outlined in the script, we really saw an increase across all the products, all the verticals, everything was up with the exception of service was plus or minus flat. So we really saw a broad based recovery in our business really explains for large part the $98 million for the quarter. Craig Ellis: And then give and takes in the fourth quarter, Mike? Mike Dodson: Yeah. We have given guidance of $98 million staying flat. That is -- it’s reflective, again, of a stronger business environment that -- than the typical seasonal decline. Again, it’s -- we see strength in the hyperscale -- scaler business. We expect meeting entertainment to continue to recover. We’re cautious there. But that should be stronger going forward. Those are the key drivers. Craig Ellis: Got it. And maybe turning to some of the comments about the new product. So one segue into the question, noting that for the second consecutive quarter product gross margins was 31%. So nice gross margin, I think consistent with what you’ve suggested in the past, Jamie, that you wanted to drive the portfolio towards higher value. So the gross margin question is this, one, is that 31% level in products really a level that is now sustainable or would we expect there to be gifts and takes with that and with regard to Square Box and ActiveScale and some of the products that were refreshed and were launched in the calendar fourth quarter? What should our expectation be for their materiality as we go through calendar 2021? How substantially could those businesses grow and become? Jamie Lerner: Yeah. Strategically, I mean, our goal is to sell larger deals. A larger deals are a result of combining multiple products together into a solution versus a point product sale. And more and more the glue that ties multiple products together is software, whether it’d be deployed on premise or on the cloud. And so our goal is to be driving higher margins to a greater mix of software, greater mix of services and a greater value by taking on more complex solutions than just an individual product sale. Now, exactly how to model that and how that’s going to take place? From my point of view, we’re in the very early days of that and simply don’t have enough customer and sales data to be able to characterize the speed in which that transition is going to take place. I mean, Mike, you may be able to give better detail than that. But we really just started putting these software products out in November. And I just don’t think we have enough data as to the speed in which we’re going to make this transformation yet to be able to characterize a multi-quarter trend. Mike Dodson: Yeah. Yeah. Craig, what I would add to that is, it is very difficult for us to forecast the rate of the transition. I mean, every quarter as it builds more scale, we intend to provide more metrics and information related to the software business, the subscription business. But at this point, it’s just hard to tell. We just started. We just announced these products in November. So we’re just starting down the path. Craig Ellis: Fair enough, Mike, and thanks for the color, Jamie. Lastly guys, nice progress with the hyperscale revenues within secondary. I’m wondering if you can just give us an update on just engagement with that customer set more broadly. As we go through calendar ‘21, should we expect the number of customer engagements, the number of customers for which you can derive revenue to expand beyond the current three? And if so, any color on geographic mix or other dynamics would be helpful? Jamie Lerner: Yeah. I mean, I can speak to our strategy. I mean, clearly, we’ve got a tiered strategy. We put a lot of energy in our sales efforts with the top eight to 10 cloud and hyperscale customers just because of just how massive their buying power is. But we also put energy to the next 200 or so accounts beneath that in the web scale companies, maybe not at hyperscale, but they certainly are -- certainly of scale and then the Global 2000, all of which have data they need to archive for decades, if not longer. And our strategy there is to increasingly solve archive problems with more software, cataloging software, data movement software, all the software that’s needed to organize an archive that could have 100 million to several billion files in it. And that’s our strategy. Obviously, we started at the top of the pyramid, but we’re pressing down. And the goal is, we need much more diversity in our install base. Having one or two very large customers is great. But that comes with all the issues of having just a handful of customers. So we’re broadening out that base much more widely and broadening it to customers that place more value on our software and more value on our services, so that we can drive the margin more aggressively than you can with the top three or four players at the top of that pyramid. Craig Ellis: That’s helpful. Thanks, Jamie. Thanks, Mike. Mike Dodson: Thanks, Craig. Operator: Your next question is coming from Eric Martinuzzi. Your line is live. Eric Martinuzzi: Hey. I had a follow up question regarding the media and entertainment vertical. I am curious to know if you qualified the recovery by saying kind of initial recovery, obviously, with the business with that vertical being off about 50% versus a year ago. What -- is you qualifier to say then that we think that things get better in December and we think they get better in March or is it just to say, hey, they got better, but it’s all relative versus a year ago? Jamie Lerner: Yeah. I would say they got better this quarter, significantly better. And it’s touching up, right? We know that you cannot easily get filming permits in New York and Los Angeles as you once were able to do. We know that sports are still playing short or limited seasons. Certainly sports that rely on ticket sales are still under pressure. So it’s an industry that’s still significantly under pressure. Now, it’s -- there was a point in time when it was in industry that stopped, right? I mean, movie television and sports in the -- in our first fiscal quarter, I mean they just stopped. I mean, now it’s moving again but at a slower pace. And it’s my belief that it will continue to recover almost in alignment to the rollout of the vaccine. And we’re cautious though, because we’ve seen variants, we’ve seen slowdowns in vaccine rollout. And so I’m optimistic about its recovery, but I’m also cautious that we don’t exactly know at what speed, what rate, what new twists and turns lay in front of us. So we’re seeing improvement, but we’re also -- we’re not euphoric, we’re cautious. Eric Martinuzzi: Yeah. And so if you were to look at pipeline in media and entertainment now versus 90 days ago, how would that change? Jamie Lerner: I’d say it’s building in strength. But I think people are still spending where they have to and they’re not leaning into projects. I think they’re behaving with caution as well. They’re not buying for one year, two years out. They’re buying for very short range projects. So I think there’s a lot of pent-up demand, but there’s a lot of caution there too. And I think it’s going to recover in correlation to how quickly they can roll out a vaccine and how effective that vaccine is. I mean, it’s a business that’s entirely characterized by humans assembling, right? Sports is about human assembly, making a movie, especially a feature film is 200 to 300 people assembled in close contact. It’s entirely about our ability to come in close contact and assemble people. And to the extent that we can assemble people quickly with a vaccine, it’ll recover and the extent that it’s drawn out, it will take longer. So it’s directly correlated to the vaccine and human assembly. Eric Martinuzzi: Okay. And then the progress with the hyperscalers, I think last quarter you said, you were going to add two new in the December quarter and then a fourth in the fourth quarter. Is that still on track? Jamie Lerner: Yeah. The business is on that trajectory. Again, they don’t always share their plans with us. But yeah, we’re loading more hyperscalers. We’re starting to load some web scale, some telcos, some other businesses as well further down that pyramid. But I think you characterize the rollout accurately. Eric Martinuzzi: Okay. And then, Mike, on the margin side, given the revenue roughly equivalent at least at the midpoint for Q4 versus Q3, and I guess the two-part question that. Should we anticipate similar OpEx in Q4 and similar gross margin to get us to this EBITDA that’s roughly equivalent to the Q -- at least at the midpoint versus Q3. Mike Dodson: Yes. The gross margin should be relatively flat, product mix relatively flat between Q3 and Q4. Had a little bit of an unfavorable product mix in Q3 relative to Q2 when we saw that decrease in margin were reflected. And then when we -- your second part of the question was? Eric Martinuzzi: Yeah. The operating expense was… Mike Dodson: Yeah. The OpEx… Eric Martinuzzi: … 30. Go ahead. Mike Dodson: Yeah. Plus or minus as we enter Q4, some of the operating expenses become under pressure as it relates to the annual audit and those types of things. But plus or minus they’re going to be in the same range. Eric Martinuzzi: Okay. And then lastly, certainly you’ve been able to attract some quality talent, Jamie. The -- you kind of got two lines, not kind of, you do have sort of two lines of business inside the Quantum. There’s your primary storage systems. You got your secondary storage systems. You’ve been adding new products in both those areas. As you’re attracting this new town from a product perspective, what do you think is the appeal for what’s attracting people to Quantum? Jamie Lerner: Yeah. I mean, I would characterize we have four core lines of business, certainly primary and secondary storage. But our cloud and analytics software is really where we’re really expanding the business and differentiating, and then our fourth line of business and our biggest business is our services business. And more and more of our products are going to be delivered as a service. So as we press that out, there’s really I think two things, maybe three that are bringing the top industry insiders here. First is strategy. I think the strategy is resonating with a lot of people who’ve been at very large bulge bracket infrastructure and storage companies. I think they view this strategy as a thought leadership and they actually combine that with a culture that they feel and I certainly feel that allows us to not only have that strategy, but to execute on it, make the acquisitions, build the products, make the moves we have to move to get it done. So I think it’s a -- it’s both the validation of the strategy and the validation of this as a culture where we can just get that work done. I think those things were question marks two years ago and now with the amount of customers it’s resonating with the top executives, I think, people just view it as, it’s a good strategy and a culture where people can come and execute and be successful. Eric Martinuzzi: Got it. Thanks for taking my question and good luck. Thank you both. Jamie Lerner: Thanks, Eric. Operator: Your next question is coming from Chad Bennett. Your line is live. Chad Bennett: Great. Thanks for taking my questions. So few questions just around the hyperscaler progress that you have made and I think it was Jamie on last call. I think you indicated a fourth hyperscaler making production buys by the end of the fourth quarter. Are we still on track for that? Jamie Lerner: Yes. I think we’re on track with them, finishing their qualifications. Production buys, as many of you track this closely. There have been delays in the LTO-9 rollout. So a lot of the rollout that’s happening with these three new comers coming on around now, it’s not coincidental that they correlate to the rollout of LTO-9. And LTO-9 has now been delayed at least till June. So there may be some impact of these newer customers look at the fourth player maybe holding out to LTO-9 and we’ll have to see. But they’re certainly coming to the end of their analysis, their trials, they’re testing and they’re coming down to their production rollout. And I think we’ll just have to see how hard they hit the throttle on LTO-8 or if they wait a little longer for LTO-9. Chad Bennett: Got it. Jamie Lerner: And… Chad Bennett: Yeah. Jamie Lerner: … we’re just going to have to see how it plays out. But I think the end result is the same. I just don’t know how much they buy stuff when there’s a whole new generation. That’s only 90 days or -- 90 days to 180 days away. Chad Bennett: No. I appreciate the color on that. And then, probably a different one of them, but you also mentioned, which I thought was pretty interesting, a new primary storage product into I think it was one of your hyperscalers that you thought you’d be able to sell into in early fourth quarter. Jamie Lerner: Yeah. Chad Bennett: And then also on the software side, some management software around primary storage or maybe both primary and secondary that you thought you make headway in this quarter. Can you address those? I assume those aren’t really LTO tied, right, so. Jamie Lerner: Not necessarily, I mean, I think, you’re pointing it to friends. One is for the -- a cloud company has many different types of storage, fast storage, slow storage, cheap storage. They have tiers of storage capability. And what we’re seeing now, as we add more customers is more of them are saying we don’t just want your hardware. We actually want your the software that allows us to write data to tape, retrieved data, organize data. So we’re seeing a higher attach rate of software where some hyperscalers are like, we just want your hardware and nothing else, we will take care of everything by ourselves and seeing more so the trend being, we want tape and the software that manages tape and the storage software and management software that allow us to build enormous archives on that tape. We’re also seeing some of them saying, hey, there’s some high speed, we’re not just interested in you for slow speed, archive, software and archive storage, we’re also interested in some of your high speed products for other use cases. And you’re seeing increasingly, we are rolling out our high speed storage on the top three cloud players and we’ll be making more announcements about that. We’re deploying on their edge storage and there’s other engagements where we’re working with a variety of different hyperscalers on different tiers of storage. So, yeah, I think, we’re -- we went from just selling tape hardware to now selling tape hardware, tape management software, storage software and now some of our primary software and hardware. Chad Bennett: Got it? And then -- and maybe you addressed a little bit, just kind of, now that we’re -- now that the new software products are out there and I understand it’s still early. But you are seeing some early success in software and solution selling and you’re breaking into new use cases. And the fact that your product revenue is held up especially in the December quarter as much as it has in light of kind of a huge headwind on M&E. Can you just… Jamie Lerner: Yeah. Chad Bennett: … give us a sense, Jamie, and I know it’s early, kind of the use cases and the solutions you’re selling now. And kind of incrementally where you’re playing in, whether it’s in primary storage or in software, or in any type of management level layer of the overall storage ecosystem relative to where you were a year ago, and kind of what the -- what are you replacing or what potentially would be competitive to you today that wasn’t a year ago, if that makes sense? Jamie Lerner: Yeah. I mean, I think, there’s a technical question there and then I think there’s also a -- and a vertical markets question. I would say two years ago, we sold predominantly to media and entertainment and enterprises wanting to do backup. If you fast forward to today, we now can offer to the traditional customers, both enterprise backup and media and entertainment. We just have more to sell them. So there were tiers of storage we didn’t use to have, right? We didn’t use to have flash storage. We gave up those sales to other people. Now we have that. We didn’t have mid-range storage. We would give that up to someone like Isilon at EMC. Now, we -- with the ATFS, we actually have that mid-range. And so we’re filling out the tiers. So the existing customers where we had gaps, we now can sell them the full range of storage they need instead of saying, you can buy some from Quantum, but you have to fill the gaps with other competitive vendors. We can now do end-to-end sales. So for the customers who we’ve had for many years, we can just sell them more. Now we’re also gaining traction in new areas, like, genomics. I mean, genomics is becoming really important, right? Everyone that gets COVID-19 has their genome sequenced to understand the impact of vaccinations upon their genome, the impact of the illness on their genome. And so just as a society, we’re collecting more genes, we are analyzing more genes. And a gene is kind of like a TV commercial, in the sense that it eats up about that much data. And so you have millions and millions of humans with lots of different genes and sequences of their genes and those repositories end up looking like gigantic repositories like you’d see at a news station. And more and more companies are coming to us saying help me organize those genes. I want to keep metadata software. So they’re looking at things like ATFS and CatDV that allow you to, if you have 40 million genes, you can’t just give them a file name, you have to say… Chad Bennett: Right. Jamie Lerner: … this file is from a male and this person is of this age, and this is their patient number, and you need to really build a lot of metadata around that file. And we’ve now built software that we just never had before to do that. So I think in verticals, we’re selling more into the existing verticals, we’re expanding into genomics, we’re expanding into medical imagery, MRI, X Ray, CAT scan, increasingly seeing just more deals in that area. Autonomous everything, again, where they’re collecting a lot of video, video surveillance, we’re again making more and more inroads in our surveillance business. So we’re selling more to the customers we’ve had historically and we’re branching into these new verticals. And when we branch into the new vertical, we just have, instead of having a single product to sell them, we are now selling them multiple products, software products and then solutions engineering, to tie it all together and help them solve a business problem. And I think that’s why and we are seeing recovery, but I think our good fortune this quarter and our strong guidance is a function of the compounding impact of recovery and successful traction on new products. We’re seeing the combined impact of both of those trends. Chad Bennett: Got it. Great insight on the future and nice job on the quarter, guys. Jamie Lerner: Thank you. Mike Dodson: Thanks, Chad. Operator: Your next question is coming from Eric Suficher . Your line is live. Unidentified Analyst: Yeah. Thanks for taking the question and congrats on a solid quarter. Can you talk about your supply chain and if there was any component constraints or anything like that? Obviously, you were able to deliver, but can you just talk about kind of the state of supply chain and where you get your components from? Jamie Lerner: Yeah. We really didn’t see any constraints in the supply chain during the quarter. We subcontract out the majority of our manufacturing on a hardware side. We use a -- one of the largest firms with a Mexico footprint. So we really haven’t seen any impact on that front. Unidentified Analyst: Okay. Can you talk about any customer concentration issues, any customers that were sighs? Jamie Lerner: Yeah. Historically, we haven’t had any 10% customers with the exception of every now and then we’ll have a distributor that really doesn’t represent concentration per se in the classic customer concentration meaning. So, we have very limited impact from that standpoint. Historically, our largest customer would have been our hyperscaler customer and that customer historically hasn’t reached the 10% point. So really, not much of an issue from our standpoint, our business model standpoint. Unidentified Analyst: Okay. Okay. And then, you talked a little bit about NVMe. In the NVMe environments, can you discuss how broadly NVMe has been adopted by the customers? Is it end-to-end or how are they using it? Jamie Lerner: Yeah. I think the way they’re using it is in a tiered model. In that they put the data that needs to be processed, accessed, modified in very high speed, they put that data on flash NVMe and then when they’re done with it, they get it off of there. So, if you’re a wealthy organization, you could do end-to-end NVMe, but I just rarely see that. What I typically see is a thin tier of NVMe then a broader tier of disk and then the biggest tier of object storage or tape archive storage. And they use our software, which is there’s a new, very deeply developed technology that we launched in StorNext 7 that dynamically organizes that for you. It decides for you when does your storage need to be on high speed NVMe, when should it be on disk and when should it be archived and it could do it based on policies or rules. And the idea would be, if you’re sequencing a gene or doing visual effects on a movie, you’re going to be up in NVMe. And then as soon as you’re done doing that work, it can slide down to disk, where it’s still fast enough to watch that movie, review the movie, have editorial review, you can even play it out to movie theaters. And then when that movies kind of come and gone, it can then slide down to an object store for a deeper cold archive and we have the software that organizes that. And that’s the way we see it deployed. So and I’m seeing more and more customers buying all of those tiers from us and even when they tier to cloud, they use our software to tier things to cloud and move it back from the cloud and use our policy engine to orchestrate all the movements of those files as they go through their workflows. Unidentified Analyst: Okay. And then a last one, the S3, I think you introduced an S3 solution to work with AWS. Any comment in terms of adoption there? Jamie Lerner: I think what we talked about regarding S3 was that our object store ActiveScale has the most complete, most thorough S3 implementation in the object storage space. And we have to had just very strong pickup of that product, in part because of the thoroughness of the S3 implementation, but also just how incredibly elegantly that product scales, how robust it is and easy to run, and we’ve recently added a lot of ransomware protection functions in it, to make it not only very scalable, very easy to use, but really locked down your data so that it’s near impossible to or someone from the outside to lock up your files or modify your files and lock you out of them and hold you for ransom. Unidentified Analyst: Very good. Thank you. Mike Dodson: Thanks, Eric. Operator: Your next question is coming from David Duley. Your line is live. David Duley: Yeah. Thanks for taking my question. Most of them have already been asked, but I’ll just have a couple of follow ups. You mentioned Q -- the current quarter seasonality, the March quarter seasonality. Typically, what is the seasonality for the March quarter on historical basis? Mike Dodson: I’d say, it ranged from the mid-to-high single digits, decrease quarter-over-quarter. David Duley: Okay. And when you think about transitioning all of your hardware products to software or a lot of them? What percentage do you actually think will ultimately, let’s say, over a three-year to five-year period transition to a software model? And why I ask it that way is. I’m sure there’s some pieces that won’t -- that you know that won’t transfer. So I’m just trying to get an idea over a three-year to five-year period what you would expect to transfer to this software-oriented model? Mike Dodson: Yeah. On our Analyst Day when we did our three-year to five-year model, as we transition. What we characterized as recurring revenue would be 70% of our total revenue. Today, it’s plus or minus 40%. That is non-product. So we’re really looking at, the 60% that is product today, half of that will move to software and half of it will remain, round numbers. David Duley: Okay. And then in your slide presentation, you have a pyramid slide there where you have the hyperscalers on top and then a couple of other incremental opportunities. I am just wondering how much bigger do you view the web scale guys in the Fortune 2000. How much bigger are those markets than that top tier of the top 10 hyperscalers. Just trying to understand what sort of… Jamie Lerner: Yeah. David Duley: …market opportunity you have here with these two big new pieces. Jamie Lerner: I mean, I think, I would characterize the difference between those tiers less in size and more in value. And what I mean by that is a hyperscaler by design wants to deliver all the technical value themselves and wants as little dependence on third-parties as possible and they -- and that’s their business model. But when you go to a web scale company or to an enterprise, they don’t feel that way. They’re happy to work with tech -- other technology companies and they’re happy to use your software, they’re happy to use your services, they’re happy for you to help them. And they don’t view that as a problem in their business model. And so while the deals may be much, much smaller, there -- the percentage of software and the percentage of services is much higher and so the margins, the profitability of those two lower pieces is drastically larger. So it may be -- may not be any bigger dollar wise to the company, but it could be over double the margins that we get from hyperscalers in those two lower tiers. David Duley: Okay. Thank you. Jamie Lerner: Okay. Thanks, Dave. Operator: There are no further questions at this time. I would now like to turn it back to Jamie for closing remarks. Jamie Lerner: All right. Well, thanks, everyone. It was a great quarter. We’re looking forward to more quarters and we’ll keep everyone updated on our transformation as we move as quickly as we can to transform ourselves into a more profitable, more earnings rich company as we transition to software, services and subscriptions. So, thanks, everyone, and we’ll be talking soon. Operator: Thank you for your participation, ladies and gentlemen. You may now disconnect.
Quantum Corporation (QMCO) Faces Financial Challenges Ahead of Earnings Release
Quantum Corporation, listed on NASDAQ as QMCO, is a company that specializes in data storage and management solutions. It faces competition from other tech companies in the data storage industry. On July 8, 2025, QMCO is set to release its quarterly earnings, with Wall Street estimating an earnings per share (EPS) of -$1.17 and projected revenue of $65.85 million.
The company recently announced a delay in filing its Annual Report on Form 10-K for the fiscal year ending March 31, 2025. This delay, as highlighted by Business Wire, is due to a review of accounting related to certain revenue matters. Consequently, the release of fiscal 2025 financial results and the business update conference call, initially scheduled for July 3, 2025, will be postponed.
QMCO's financial metrics reveal some challenges. The company has a negative P/E ratio of -0.35, indicating negative earnings. Its price-to-sales ratio is 0.20, suggesting the market values its sales at a low level compared to its stock price. The enterprise value to sales ratio is 0.65, reflecting the company's valuation in relation to its revenue.
The enterprise value to operating cash flow ratio is -18.88, indicating difficulties in generating positive cash flow from operations. The earnings yield is -2.83%, further highlighting financial struggles. The debt-to-equity ratio is -0.75, suggesting more liabilities than equity, which could concern investors. The current ratio is 0.37, indicating potential liquidity issues, as the company may struggle to cover short-term liabilities with current assets.
Quantum Corporation's Financial Challenges and Legal Investigation
- Quantum Corporation (NASDAQ:QMCO) reported an EPS of -$1.16, meeting expectations but highlighted revenue shortfall and ongoing financial challenges.
- The Law Offices of Frank R. Cruz launched an investigation into Quantum for potential violations of federal securities laws, affecting investors.
- Quantum announced a delay in filing its Annual Report, indicating issues with accounting related to certain revenue matters and potential liquidity concerns.
Quantum Corporation (NASDAQ:QMCO) specializes in data storage and management solutions. On June 30, 2025, QMCO reported an earnings per share (EPS) of -$1.16, aligning with the estimated EPS of -$1.16. The company generated a revenue of $65.7 million, slightly below the estimated $65.85 million. Despite meeting EPS expectations, the revenue shortfall highlights ongoing financial challenges.
The Law Offices of Frank R. Cruz has launched an investigation into Quantum for potential violations of federal securities laws. This investigation is on behalf of investors who may have suffered financial losses due to the company's actions. On June 30, 2025, Quantum disclosed its inability to meet certain obligations, triggering the investigation. Investors are encouraged to contact the law firm to explore potential claims.
Quantum has also announced a delay in filing its Annual Report on Form 10-K for the fiscal year ending March 31, 2025. The company submitted a Notification of Late Filing on Form 12b-25. This delay affects the release of Quantum's fiscal 2025 financial results and the business update conference call, initially set for July 3, 2025. The delay is due to a review of accounting related to certain revenue matters.
Quantum's financial metrics further illustrate its challenges. The company has a price-to-earnings (P/E) ratio of approximately -0.39, indicating negative earnings. The price-to-sales ratio is about 0.23, suggesting the market values the company's sales at a low multiple. The enterprise value to sales ratio is approximately 0.67, reflecting the company's valuation in relation to its revenue.
The enterprise value to operating cash flow ratio is around -19.55, highlighting difficulties in generating positive cash flow from operations. The earnings yield is approximately -2.55%, emphasizing financial difficulties. Additionally, the debt-to-equity ratio is about -0.75, indicating a negative equity position, and the current ratio is approximately 0.37, suggesting potential liquidity concerns.
Quantum Corporation's Upcoming Earnings Report: A Financial Overview
- Quantum Corporation (NASDAQ:QMCO) faces significant financial challenges with an estimated EPS of -$1.16 and projected revenue of $65.85 million.
- The company's negative earnings are highlighted by a P/E ratio of -0.43, indicating profitability issues.
- Liquidity concerns are evident with a current ratio of 0.37, suggesting potential short-term operational difficulties.
Quantum Corporation, listed as NASDAQ:QMCO, is preparing to release its quarterly earnings on June 16, 2025. The company is known for its data storage and management solutions, catering to a wide range of industries. Despite its established presence, QMCO faces financial challenges, with Wall Street estimating an earnings per share (EPS) of -$1.16 and projected revenue of $65.85 million.
The company's financial metrics reveal significant hurdles. With a price-to-earnings (P/E) ratio of -0.43, QMCO is currently experiencing negative earnings. This indicates that the company is not generating profit relative to its share price. Additionally, the price-to-sales ratio of 0.25 suggests that the market values QMCO at 25 cents for every dollar of sales, reflecting investor skepticism.
QMCO's enterprise value to sales ratio stands at 0.69, which shows how the market values the company relative to its sales. However, the enterprise value to operating cash flow ratio of -20.22 highlights the company's struggles in generating positive cash flow. This is a critical concern for investors, as it indicates potential difficulties in sustaining operations without external funding.
The company's earnings yield of -2.32% further underscores its financial difficulties. This metric, which represents the inverse of the P/E ratio, suggests that QMCO is not providing returns to its shareholders. Moreover, the debt-to-equity ratio of -0.75 indicates a negative equity position, raising concerns about the company's financial stability and ability to meet its obligations.
Liquidity is another area of concern for QMCO, with a current ratio of 0.37. This ratio measures the company's ability to cover its short-term liabilities with its short-term assets. A ratio below 1 suggests potential liquidity issues, which could impact QMCO's ability to operate effectively in the short term. As the company prepares to release its earnings, these financial metrics will be closely scrutinized by investors and analysts alike.
Quantum Corporation's Capital Utilization Efficiency Compared to Peers
- Quantum Corporation (NASDAQ:QMCO) has a Return on Invested Capital (ROIC) of 0.87%, significantly lower than its Weighted Average Cost of Capital (WACC) of 14.52%, indicating inefficiencies in capital utilization.
- Quantum Computing, Inc. and other peers like PowerFleet, Inc. and Rimini Street, Inc. also show negative ROICs, suggesting they are not generating sufficient returns to cover their costs of capital.
- Usio, Inc. stands out with a remarkable ROIC of 133.16% compared to its WACC of 11.75%, indicating highly efficient capital utilization.
Quantum Corporation (NASDAQ:QMCO) specializes in data storage and management solutions, offering services and products that help businesses store, manage, and protect their data. In the competitive landscape, Quantum faces peers like Quantum Computing, Inc., PowerFleet, Inc., Rimini Street, Inc., Ribbon Communications Inc., and Usio, Inc., each with varying efficiencies in capital utilization.
Quantum's Return on Invested Capital (ROIC) is 0.87%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 14.52%. This indicates that Quantum is not generating sufficient returns to cover its cost of capital, suggesting inefficiencies in how it uses its capital. The ROIC to WACC ratio of 0.06 further highlights this challenge.
In comparison, Quantum Computing, Inc. has a negative ROIC of -33.77% against a WACC of 19.70%, resulting in a ROIC to WACC ratio of -1.71. This suggests even greater inefficiencies in capital utilization compared to Quantum. Similarly, PowerFleet, Inc. and Rimini Street, Inc. also show negative ROICs, indicating they are not generating returns that meet their respective costs of capital.
Ribbon Communications Inc. presents a slightly better scenario with a positive ROIC of 3.03% but still falls short of its WACC of 13.02%, resulting in a ROIC to WACC ratio of 0.23. This indicates that while Ribbon is generating some returns, it is not enough to cover its cost of capital effectively.
Usio, Inc. stands out with a remarkable ROIC of 133.16% compared to its WACC of 11.75%, leading to a ROIC to WACC ratio of 11.33. This indicates that Usio is highly efficient in capital utilization, generating substantial returns that far exceed its cost of capital, making it the most efficient among the peers analyzed.
Quantum Corporation's Capital Utilization Efficiency Compared to Peers
- Quantum Corporation (NASDAQ:QMCO) has a Return on Invested Capital (ROIC) of 0.87%, significantly lower than its Weighted Average Cost of Capital (WACC) of 14.52%, indicating inefficiencies in capital utilization.
- Quantum Computing, Inc. and other peers like PowerFleet, Inc. and Rimini Street, Inc. also show negative ROICs, suggesting they are not generating sufficient returns to cover their costs of capital.
- Usio, Inc. stands out with a remarkable ROIC of 133.16% compared to its WACC of 11.75%, indicating highly efficient capital utilization.
Quantum Corporation (NASDAQ:QMCO) specializes in data storage and management solutions, offering services and products that help businesses store, manage, and protect their data. In the competitive landscape, Quantum faces peers like Quantum Computing, Inc., PowerFleet, Inc., Rimini Street, Inc., Ribbon Communications Inc., and Usio, Inc., each with varying efficiencies in capital utilization.
Quantum's Return on Invested Capital (ROIC) is 0.87%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 14.52%. This indicates that Quantum is not generating sufficient returns to cover its cost of capital, suggesting inefficiencies in how it uses its capital. The ROIC to WACC ratio of 0.06 further highlights this challenge.
In comparison, Quantum Computing, Inc. has a negative ROIC of -33.77% against a WACC of 19.70%, resulting in a ROIC to WACC ratio of -1.71. This suggests even greater inefficiencies in capital utilization compared to Quantum. Similarly, PowerFleet, Inc. and Rimini Street, Inc. also show negative ROICs, indicating they are not generating returns that meet their respective costs of capital.
Ribbon Communications Inc. presents a slightly better scenario with a positive ROIC of 3.03% but still falls short of its WACC of 13.02%, resulting in a ROIC to WACC ratio of 0.23. This indicates that while Ribbon is generating some returns, it is not enough to cover its cost of capital effectively.
Usio, Inc. stands out with a remarkable ROIC of 133.16% compared to its WACC of 11.75%, leading to a ROIC to WACC ratio of 11.33. This indicates that Usio is highly efficient in capital utilization, generating substantial returns that far exceed its cost of capital, making it the most efficient among the peers analyzed.
Quantum Corporation's Financial Performance and Capital Efficiency Compared to Peers
- Quantum Corporation (NASDAQ:QMCO) has a ROIC of 0.87%, significantly lower than its WACC of 14.78%, indicating inefficiencies in capital utilization.
- Ribbon Communications Inc. shows better capital efficiency with a ROIC of 2.93% compared to its WACC of 9.36%.
- Usio, Inc. demonstrates exceptional capital efficiency with a ROIC of 133.16% against a WACC of 11.91%, suggesting strong growth potential.
Quantum Corporation (NASDAQ:QMCO) specializes in data storage and management solutions, competing with firms like Quantum Computing, Inc., PowerFleet, Inc., Rimini Street, Inc., Ribbon Communications Inc., and Usio, Inc. in the technology sector.
In evaluating Quantum's financial performance, the Return on Invested Capital (ROIC) is a crucial metric. Quantum's ROIC is 0.87%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 14.78%. This disparity indicates that Quantum is not generating sufficient returns to cover its cost of capital, suggesting inefficiencies in how it uses its capital.
Comparatively, Quantum Computing, Inc. has a negative ROIC of -33.77% against a WACC of 17.45%, resulting in a ROIC to WACC ratio of -1.93. This shows even greater inefficiency in capital utilization than Quantum. Similarly, PowerFleet, Inc. and Rimini Street, Inc. also have negative ROICs, indicating they are not generating returns that exceed their costs of capital.
Ribbon Communications Inc. presents a more favorable picture with a ROIC of 2.93% and a WACC of 9.36%, resulting in a ROIC to WACC ratio of 0.31. This suggests that Ribbon is more efficient in using its capital compared to Quantum. However, Usio, Inc. stands out with a ROIC of 133.16% and a WACC of 11.91%, leading to a ROIC to WACC ratio of 11.19, indicating exceptional capital efficiency and strong growth potential.
Quantum Corporation's Financial Performance and Capital Efficiency Compared to Peers
- Quantum Corporation (NASDAQ:QMCO) has a ROIC of 0.87%, significantly lower than its WACC of 14.78%, indicating inefficiencies in capital utilization.
- Ribbon Communications Inc. shows better capital efficiency with a ROIC of 2.93% compared to its WACC of 9.36%.
- Usio, Inc. demonstrates exceptional capital efficiency with a ROIC of 133.16% against a WACC of 11.91%, suggesting strong growth potential.
Quantum Corporation (NASDAQ:QMCO) specializes in data storage and management solutions, competing with firms like Quantum Computing, Inc., PowerFleet, Inc., Rimini Street, Inc., Ribbon Communications Inc., and Usio, Inc. in the technology sector.
In evaluating Quantum's financial performance, the Return on Invested Capital (ROIC) is a crucial metric. Quantum's ROIC is 0.87%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 14.78%. This disparity indicates that Quantum is not generating sufficient returns to cover its cost of capital, suggesting inefficiencies in how it uses its capital.
Comparatively, Quantum Computing, Inc. has a negative ROIC of -33.77% against a WACC of 17.45%, resulting in a ROIC to WACC ratio of -1.93. This shows even greater inefficiency in capital utilization than Quantum. Similarly, PowerFleet, Inc. and Rimini Street, Inc. also have negative ROICs, indicating they are not generating returns that exceed their costs of capital.
Ribbon Communications Inc. presents a more favorable picture with a ROIC of 2.93% and a WACC of 9.36%, resulting in a ROIC to WACC ratio of 0.31. This suggests that Ribbon is more efficient in using its capital compared to Quantum. However, Usio, Inc. stands out with a ROIC of 133.16% and a WACC of 11.91%, leading to a ROIC to WACC ratio of 11.19, indicating exceptional capital efficiency and strong growth potential.
