Quantum Corporation (QMCO) on Q4 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 Fourth Quarter and Full Year Results for Fiscal Year 2021. At this time all participants are in a listen-only mode. 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 fourth quarter and full year 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 results for our fourth quarter and fiscal year 2021 with both adjusted net income and earnings per share exceeding our guidance. Strong demand led to our third consecutive quarter of increasing customer orders, allowing us to finish the year with a material increase in bookings while demonstrating early traction on our software and subscription contracts. Mike Dodson: Thank you, Jamie. Welcome to everyone who’s joined our call today. As Jamie mentioned in his opening comments, our fourth fiscal quarter 2021 demonstrated very strong customer demand, representing the third consecutive increase in bookings, with customer demand returning to pre-COVID levels. However, the industry-wide supply chain shortages that materialized late in the quarter restricted our ability to fulfill all orders. As a result of these supply chain constraints, revenue was $92.4 million for the fourth fiscal quarter of 2021. These supply shortages have the most prominent impact on our secondary storage system customers. Despite this lower revenue level, all product segments grew sequentially, with the exception of our primary storage systems, which declined sequentially predominantly due to seasonality in the government business. For the full year of fiscal year 2021, revenues were $349.6 million down 13.2% year-over-year, primarily reflecting the COVID-related headwinds impacting all geographies and product lines. On a vertical view year-over-year, the government business increased by 32%. While the media and entertainment business declined by 36%, with all other verticals declining to a lesser extent. Gross margin in the fourth fiscal quarter was 42.1% compared to 43.1% in the prior quarter. The sequential decline is primarily due to lower government business revenues, which carry higher gross margins. Year-over-year gross margin improved slightly to 43.1% compared to 42.8% in the prior year. GAAP operating expenses in the fourth quarter were $36.6 million, compared to $36.2 million in the prior quarter. Non-GAAP operating expenses during the fourth fiscal quarter were $32 million, a decrease of $1.7 million sequentially. The sequential decrease in non-GAAP operating expenses was primarily due to higher R&D expenses, more than offset by lower G&A expenses. The increase in research and development spending was due to increased headcount primarily related to a business acquisition, and professional services costs related to new product development. The decrease in general and administrative expense spending was primarily reduced compensation costs and other discretionary cost savings. On a year-over-year basis, GAAP operating expenses were $142.4 million, compared to $151.3 million in the prior year. The non-GAAP operating expenses of $127.3 million in fiscal year 2021 was a $3.8 million decrease versus prior year at $131.1 million. Jamie Lerner: Thanks, Mike. As I reflect on the last year, I’m very proud of the Quantum team for how far we’ve come. We have demonstrated exceptional resilience during this global pandemic. And I want to acknowledge our employees and their families, many of whom have faced incredible challenges during the last year. It has been a unique year for everyone, including Quantum. But even in the face of these challenges brought on from the pandemic, we are still making substantial progress on our transformation initiatives throughout the year. In addition, during the fiscal 2021, we made significant improvements on our capital structure, which enabled us to reduce debt, strengthen our cash position and improve our operating flexibility to support our growth initiatives, both organically and inorganically. We are starting the new fiscal year with strong product bookings, and increasing momentum and subscription and software contracts. We’re working closely with our suppliers to address the supply constraints, but remain pleased with the increased level of demand, we are seeing in a post-pandemic world. With an expanded portfolio of solutions and a solid balance sheet we are much better position than in previous years to withstand these short-term supply chain disruptions. And we are poised for a return to growth with increasing demand and orders across our business. With that, we’ll now take any questions you may have. Operator? Operator: Thank you. Your first question is coming from Craig Ellis . Your line is live. Craig Ellis: Yes, thanks for taking the question, guys. And congratulations on the demand profile back at pre-COVID levels. Mike, I wanted to start off just by understanding the nature of the component issues that you and Jamie spoke to. So one, you identified that they started to emerge late quarter, can you provide some color on what components they were we’ve seen tightness in HDDs and SSDs. But I think you said there was more of an impact on the secondary business and that doesn’t sound like HDD or SSD. So, if you could just give some more color on what’s at play there? And the extent to which those issues are either stabilizing and starting to get better or maybe intensifying further, that would help as well as a start on that issue? Mike Dodson: Sure, Craig. Well, it was, like we mentioned on the call. It was in the secondary area, which is our tape business, right. And, we don’t like to get into a lot of specifics as far as the suppliers, but it’s really specialized silicon. That is really, for us. It’s a pretty short lead time. So it really surprised us at the end of the quarter. From that standpoint, it’s something we expect, we’ll work its way out, hopefully in the next one or two quarters. But really, it’s difficult to tell at this time. Craig Ellis: Okay. And then that really relates to the second question, so nice to get the color on how you’re looking at fiscal 2022 with that range of $380 million to $420 million off of the guidance for the first fiscal quarter at the low end. I think that could imply something like $96 million a quarter at the high end. As much as $109 million a quarter, how quickly do you think you can get things resolved. It seems like, the business has a demand profile that’s at least $105 million to $106 million, but how quickly can the supply chain respond to the demand that you have and can provide any color on how that nice high level backlog is shaking out either amongst the primary business, the secondary business or maybe services? Mike Dodson: Yes, I think it’d be fair to characterize it in a way that, when we start to get the supply back, it will come back very quickly. It’s a matter of, we’ve got the demand. We get the component. And we’ll catch up very quickly. It’s of that nature. Jamie Lerner: Yes. Hey, Craig, it’s Jamie. The way Mike and I have been thinking about it is, when we think about the range of $380 million to $420 million for the year. We’re confident, we have the demand to meet the $420 million or above, we’ll have signed contracts, purchase orders at the $420 million or above level. And the determining factor of where we’re land between the $380 million and the $420 million is not a function of demand or sales performance is purely a function of material availability. So if materials are available, we’re at the high end of that range. If materials are not available, we’re at the lower end of the range. And if these industry-wide supply issues resolved themselves, which many people are thinking, we’ll resolve within 12 months, which is within our fiscal year then I think all the backlog flows through. We’ve never given backlog guidance, because the companies, usually when we sell something, we ship it within two weeks. So, we’ve never really had a backlog of any sizable nature. And now we’re seeing backlogs that are, 10% to 15% of our quarter is going into backlog. And really, it’s now becoming a function of the ability for that backlog to flow through and will flow through in the year and will the supply chain constraints resolved within the year? Craig Ellis: Yes, that’s really helpful, Jamie, and if I could ask one more before jumping back in the queue. You mentioned, you have I think it was 120 customers that have signed up for subscription services. And I just wanted to use that as a segue to get some feedback on how the latest version of StorNext 7 is doing? What are you hearing back, now that you’ve got the CatDV product that’s out there that more customers can have access to under the Quantum umbrella and any of the other new or recently refreshed product developments? How are they resonating with clients? Jamie Lerner: Yes, we have basically and entirely refreshed portfolio. Every product we have has a new version out. So with StorNext 7, we’ve made it drastically easier to use. We now have it virtualized and containerized on H4000. So it’s effectively a cloud architecture. So, it can now run on Amazon and other clouds. It’s available on subscription. It’s monitorable and manageable from the cloud. And we set the worldwide speed record for reading and writing video files. And that coupled with the return of media and entertainment, the strength in genomic research, autonomous vehicles, the products doing really well. And it brings with it or other products because increasingly, we’re selling the products as a suite where for many years Quantum sold point products, or you bought a tape product, you bought a backup product. Now, we’re sitting with someone and saying sitting with our customers and saying, we want to help you solve all of your storage problems, whether they be surveillance related, backup related, high performance analytics related, and we’re really competing with our suite more than the point products. And I really think that’s how we’re going to move our company to a totally different class of competition over the next several years where we really bring our whole storage portfolio forward. So that’s CatDV just strengthens that right we have a high attach rate from StorNext to CatDV. We have a high attach rate from StorNext to tape and StorNext to backup products. And we’re increasingly selling and designing our products to sell them as a suite of products or a combination of products versus single point products. Craig Ellis: That’s really helpful. Thanks, guys. I’ll hop back in the queue. Operator: Your next question is coming from George Iwanyc . Your line is live. George Iwanyc: All right, thank you for taking my questions. Jamie, maybe just following up on your previous comments about the sales motion, can you give us a sense of, how far along are you with that shift from product selling to solution selling? And you are – I’ve already seen a nice step up in average selling price, I think was 21% year-over-year, you feel like there’s a lot of room to continue to grow both large deals and then the overall breath of the customer base? Jamie Lerner: Yes, I mean. I feel there’s a large amount of headroom for us. And really, what we’re doing is we’re increasingly shipping our products as solution combinations. So a good example is, well, we have a forthcoming product that is a combination of CatDV and StorNext, that they’re bundled together in a virtualized fashion. We have upcoming products that will be object storage using cold storage technologies. So, combining multiple products together to solve a business problem. So, we’ll be doing many more solutions of that kind. Think of it as a genomics solution. A genomic sequencing infrastructure, a movie making infrastructure, and autonomous vehicle development infrastructure versus how many terabytes of storage do you want? So, we’re doing more solutions. We’re doing more surveillance related solutions as well. And I think that allows us to increase average selling price, it allows us to compete more effectively, many of our competitors just have a point product. And we come forward with a full solution. We just have a much stronger position. So, I think we’re getting much more competitive. I think we’re getting more relevant with our customers. And I think the solutions we sell are much stickier than the point products we previously sold. And that’s why we’re, in this situation where the sales team sold well above the range we gave last quarter, they were – they are in accelerators, they are selling above our guidance levels. And really were throttled by material availability, which as we all know, it eventually clears up and flows through. But what I’m most, encouraged by is the sales team, beating plan selling above our guidance range, and building the meaningful backlog. And I think that’s happening. Some of that is COVID recovery. But I think we all know, Europe isn’t fully recovered, Asia isn’t fully recovered. A lot of us at being add or above pre-COVID levels is the increased relevance of the products and the larger average selling size of our solution approach. George Iwanyc: Thank you for that. And maybe pivoting a little bit and just focusing on the primary storage. What type of attach rates are you seeing there? And how big do you think that business can get over the – let’s say, the next 12 months? Is that within your annual guidance? How much of the positive lever is that? Jamie Lerner: Yes, I mean, a lot of our success are forward success and primary storage is becoming relevant outside of our traditional core strength. I think StorNext is considered to be the industry standard for post-production in movies and television. And we have a lot of that market, or certainly the high end of that market. So for us to expand, we have to become relevant elsewhere. That would be genomic sequencing, medical imaging, autonomous vehicle development, enterprise and corporate use cases, corporate video, but other forms of unstructured data. And that does take us into some new competitors. But I think that’s really where we see our growth is can we begin to take our primary products, which are really StorNext and ATFS, and begin to sell them into use cases outside of media and entertainment. And we’re seeing a lot of positive traction there. But we have a long way to go. And I think our roadmaps are getting us there in terms of making the product easier, making the products have different sizes. Particularly, as we get more software defined and get more cloud enabled, it’ll bring us into more use cases than we’ve traditionally served in media and entertainment. So it’s really about can we be relevant in new vertical markets? George Iwanyc: And Mike just a quick question for you on the gross margin side, it sounds like mix had the biggest impact on the quarter, but with the supply chain constraints, can you give us a kind of a sense for the risk reward outlook for gross margin over the next couple quarters? Mike Dodson: Yes, I think when we look at our gross margins, the mix is important. So, when we get into quarters, for example, where the government is strong, which is our Q3 and Q2 that will be beneficial as we move to the software subscription. Obviously, that’s a better margin. So the transformation, we do expect to see the margin move to north as we move forward. But it’s going to be gradual. And the supply shortages that we see, we don’t see that having a significant impact on our gross margins from that standpoint. George Iwanyc: Thank you. Mike Dodson: Okay. Operator: Your next question is coming from Nehal Chokshi . Your line is live. Nehal Chokshi: Thank you, and congrats on seeing an order book consistent with pre-COVID levels, and for a book to continue to increase. That’s great. And I do actually see a strong free cash flow generation at quarter and a drawdown in inventory in the quarter. And so the explanation that you saw components orders definitely make sense. However, one little brochure want to clarify here, your day’s inventory heading into March queue set had about 90 days. And was $13 million above a year ago levels. So it seems like you guys would have had some buffer inventory for at least this quarter. Can you just explain, what’s the missing link here? Jamie Lerner: Yes, I think there’s offsetting factors versus we have talked about it on the call. We have moved inventory, off the balance sheet to a contract manufacturer. So that reduced our inventory. Offsetting that was with these shortages, because it’s a component shortage. We have essentially full units manufactured waiting for these components to be added. Right. So that there was offsetting factors. Nehal Chokshi: And inventory that was moved to the contract manufacturer was that finished goods? Or was that components then? Jamie Lerner: It would have been finished goods. Nehal Chokshi: It was finished goods. Okay. Jamie Lerner: I guess, I would liken it to automobile makers who are building full cars, but can’t ship them because they’re missing some chips. We’re building fold tape arrays and the components we need just the last small chips we need didn’t arrive. So that’s waiting for those components to ship them. So it may be counterintuitive to be supply constrained, but building up inventory and that’s we’re building full units to ship, but they’re waiting on a final component to be able to ship them. Nehal Chokshi: These basically the basics or the controller’s behind the takeaways or if it’s something else? Jamie Lerner: I’d rather not, get into which suppliers and suppliers of what, but they are chips that are integral to the operation of the predominately the tape system. So that’s why we’re seeing this maybe before other folks are seeing it, because it’s very tape specific and it’s a very short-term product. So it hits supply chain and comes to us in a very short cycle. Nehal Chokshi: Gotcha. Understood. Yep. By the way is backlog typically fall in your 10-K? Jamie Lerner: No. We’ve always, like I said, we sell and ship a week or two later. So, we’ve never really run backlog or had a backlog that was significant. And now for the first time we have significant backlogs. And again, if it continues, we’ll probably provide more and more clarity. But I would go to this point, we gave guidance for this quarter of $98 million plus or minus $3 million. So the high end of the range was… Mike Dodson: $101 million. Jamie Lerner: $101 million. We were millions of dollars above that in our sales execution. So, we are beating our range in sales achievement. And that’s what I’m most encouraged about, right. We’re executing. We’re getting our deals done, and the products are resonating. And we’ve got to deal with this. What I hope is a short-term supply constraint in some of these specialized chips for tape systems. Nehal Chokshi: Okay. Great. And it sounds like you would expect, given the guidance that you are providing, and the commentary that you expect demand to be above pre-COVID levels, then that you would expect backlog to increase into June quarter as well. Mike Dodson: Yes, slightly. Yes. Jamie Lerner: Yes. If supply doesn’t clear what you probably want, we’ll be building backlog. Mike Dodson: Yes. Nehal Chokshi: Okay, great. And then nice little metric that you’ve given on the software subscription customers in the quarter. Can you give some context on how that compares to a prior quarter? And then maybe percent of customer’s transactions were made with overall, and maybe also presented the overall customer base that this now represents? Jamie Lerner: Yes, I mean, we have, over 18,000, 19,000 customers, so 120 as a percentage, it’s still not meaningful, but it’s growing incredibly fast, right? I mean, in December, we had zero, are nearly zero. So, we are over a pretty short period of time moving this direction quickly. I think it’ll continue to increase at this pace. And we’ll be moving more of our products to this model. So, we did our first wave, but all of our new product introductions, everything going forward is moving more to a subscription, or entire service based model. And our new comp plan this year is waiting that even more for our sellers to push that there and the economics to our end customers are incentivizing them increasingly to go to service, or recurring model. So, I expected to accelerate. We went from zero to 120. And four and a half months, and I think that’ll just continue to go up. I hope to exit the year at well over 1000. Nehal Chokshi: Fantastic. Thank you very much. Jamie Lerner: Yes. Operator: Your next question is coming from Nick Mattiacci . Your line is live. Nick Mattiacci: Hi, this is Nick Mattiacci on for Chad Bennett. Thanks for taking our questions. I just had a question on the royalty business. I’m curious about what your perspective is on the timeline for the rollout of LTO-9. And I guess, are you seeing any pent-up demand for this new generation or if demand is still strong for the prior generations? And then maybe, if you could just talk about expectations for royalty revenue this year, relative to the past year? Jamie Lerner: Yes, I’ll talk to the roadmap and Mike can cover the kind of how we’ve modeled the royalty. I do expect a surge in demand up when LTO-9 is available. I think there are people running LTO-7 in an M8 format that don’t have a lot of incentive to upgrade to LTO-8, but have a lot of incentive to go to LTO-9. So, right now that is supposed to be and I haven’t heard otherwise that is a early fall release. And I would expect a lot of customers to either refresh upgrade or move to that architecture. So, I would expect that to increase demand and obviously the newer generations drive royalty as well. So and I – we do have customers that are giving us demand signal now that they are waiting for that and are going to be drawing heavily on that you could imagine hyperscalers, they really they want the greatest density that they can possibly achieve. So, you can imagine a lot of people are going to be moving to that as quickly as possible. So, I think it’s positive for the library business. I think it’s positive for refreshes and upgrades. And I think it’s positive for the royalty. It is running late. But everything I’ve heard is it’s now settling in on a, September, October release timeframe. Mike Dodson: Yes, and as far as our expectation, I mean, our run rate is running between four and five right now per quarter. And it’s a little bit lower than it was the previous year. And we would expect that to remain pretty constant in this coming year. So that’s, where you should be coming out. Nick Mattiacci: Got it. Thank you. Mike Dodson: Thanks. Operator: Your next question is coming from Eric Martinuzzi . Your line is alive. Eric Martinuzzi: I had a question on the supply chain issues, just things that you’ve changed from a management perspective, you’re typically when you get to a disruption in the normal course of things, there winds up being an extra level of scrutiny or report that you got once a week, you’re now checking out once a day. Anything changed there as far as a tighter grip on the problem? Jamie Lerner: Yes, first of all, we know exactly where the problem is. We do talk to that supplier, daily. Our supply chains are deeply integrated and have been deeply integrated for over 20 years. So, we’re pretty intimate with it. There because of this, we’re not talking about servers here; we’re not talking about commodity equipment. This is a specialized chipset for a very specialized item that only several of us in the world make. So there aren’t lots of alternative suppliers. And it’s not like you can make this chip or in another foundry very quickly. So, we are – I mean, we are beating the bushes in all alternative methods. We are open to buying allocation, if it’s possible, we’re looking at gray market allocation, buying allocation from other vendors. So, I mean, we are grinding this one as hard as we can. And I think in terms of putting experts on it actually flying people to sit at the suppliers. We have people actually sitting in certain fabs and factories to see how we can help. So, we’re swimming up and down this one, I think in just about every way that is helpful. I think we understand this problem deeply and completely. This has been our wheelhouse for 20 years. So this is one we really understand. But I don’t think it’s a scenario where we could just buy the chip from someone else. This is one we have to work through the supply chain. And I don’t and I have not seen issues like this last longer than six to 12 months. And I do not believe this will last longer than six to 12 months, and I think it will resolve within this year. Eric Martinuzzi: And then as far as, as you do get access to these components to turn them into finish to turn your units into finished goods. Are you satisfying orders in the order of which they are received or are you prioritizing certain customers? Jamie Lerner: We’re managing our allocation based on economics. Eric Martinuzzi: Okay. Jamie Lerner: Right, highest margin customers get allocation first. And solid orders with the best economics are going to receive allocation first. Eric Martinuzzi: I understand the logic there. And then as far as, you did talk on the hyperscalers. This was plural where we’ve got order from hyperscalers. We’re working with more hyperscalers in the design phase. Any issues here or your customers who had orders in place on the hyperscaler side have a sympathetic to the supply chain issues? Do we have any reputation or brand damage here with the supply issue ? Jamie Lerner: No. I think they have full visibility as to the source of the shortage. And I think they recognize that is in a – it is in a Quantum related item. It’s from a downstream supplier. And they understand that. So, I think they’re sympathetic. They’re frustrated, because our hyperscaler customers are cranking their orders up. I think almost every hyperscaler we have has increased their demand signal with us. They’re buying more from us. They’re almost saying they’re running out of cloud, and they need to buy more. And this I – and it affects them. And so they’re concerned, I don’t think there’s brand damage or anything along those lines, because it’s – these aren’t things that they’re not commodity components. But we meet with them regularly. We’re giving them we’re asking them for very clear demand signal. We’re providing them very clear allocation expectations. And it’s allowing us in some cases to reset the table in terms of margins. Eric Martinuzzi: Okay. And then the last question for me has to do with, you mentioned, media and entertainment. It sounded like there is a little bit of a comeback. I don’t know whether that’s kind of a reopening of the ability to – for them to conduct their business, or reopening of them demanding product from Quantum. Could you address this media and entertainment kind of compared to versus January this year? Jamie Lerner: Yes, there’s just – there’s more demand for movies. Now, people can see opening a theatrical, there’s more streaming, the content wars are heated back up. And it’s game on for sports, it’s game on for television production, it’s game on for movie making. So, I think we’re returning to pre-COVID levels there to get our StorNext business above pre-COVID levels. We need to go start moving to other markets, I think, we recovered there. And we’re getting a lot more attached rate with CatDV. But to really grow that business, we’re probably not going to grow a lot more in media and entertainment. We’re going to start branching into bigger markets that are less niche markets. Eric Martinuzzi: Okay. All right, thanks for taking my questions. And good luck in Q1. Jamie Lerner: Thank you, Eric. Operator: Your next question is coming from . Your line is live. Unidentified Analyst: Hey, thanks, guys. Appreciate you taking the question. Jamie a little bit of a bigger picture one here, how would you describe sort of the most important growth drivers for this year? And what are some of the things do you feel like you need to do to go after them and generate the sort of the bookings that you want from them? And then I have a quick follow up as well. Thanks. Jamie Lerner: Yes, I think the big new motions, both technical and technical architecture motions, as well as selling motions, are all about solutions. We’ve refreshed our whole product portfolio. So, our point products, StorNext, DXi, our Scalar tape products, the ATFS product, the CatDV product, every one of those is in a brand new refresh. But now what we’re doing – and we did that last year. Now, what we’re doing this year is combining them into solutions, specific solutions for genomic sequencers, for autonomous vehicle makers, for movie makers. And it’s that architectural bundling of products, and the selling motion of a solution and a suite of products is really what we’re working to execute on this year, and moving more and more of those suites of products to operate both on-premise and in the cloud. And that those are the two big moves, selling solutions, and those solutions being hybrid in nature, and that they work on-premise and in the cloud. And as we do that, I just think the company continues to accelerate. Unidentified Analyst: That’s super helpful. And what the technical action are you going to take them from point products into bundles? Are those sophisticated, or they pretty straightforward? Jamie Lerner: Well, I think there’s two items that we have to achieve. The first is a cultural item. It’s very easy for a product company to organize itself by product. But when you begin to build solutions, those siloed teams have to work together communicate. So it’s a lot of it is, how we run our business that are product teams now think about solving business problems, working together and combine products. So it’s a different way of working is step one. And step two is the technical issues, how do we combine our products that the combination is greater than the some other parts. And a lot of that is a much deeper understanding of the problem we’re solving. Right? We’re not just building a storage system. We’re helping a genomic sequencer. We’re not just creating storage features. We’re helping someone make a movie, or helping NASA go to Mars, right. So it’s really changes and how we, as leaders lead the team, and how we organize our team and that they’re organized to collaborate. And they think about solving a business problem versus adding lots of technical features. So, it’s all really an approach about how we build and sell. And it really starts with a with leadership, and kind of what our goals are, and our goals are becoming less technical feature goals, and more working with our customers to solve business problems. And it’s a big mindset change for us. Unidentified Analyst: That’s helpful. Yes, now, that’s really helpful. I appreciate the detail. Thanks for that. And just quick follow up here. On the supply constraints, given the specificity of the component tree, do you feel like you have a handle on how bad – how constraint it could be jump? And what’s the visibility there? Appreciate it. Thanks. Jamie Lerner: Yes, I mean, we have minimum volumes we’ve been given. So, I think we know what the low mark is. And we’ve been given strong commitments that it will not go lower than certain levels. And we’ve packed that into our guide. So, I think we understand the low mark. And so far, our suppliers are meeting that are a bit above that. So, I think we’re in a model where it can only improve. But we can feel pretty comfortable that we basically receive these materials weekly. And it’s – we’re getting what they committed to us was not what we want. It isn’t unstable. I think it’s stable at lower levels. And they’ve committed that it won’t go any lower. So to that extent, I don’t think it’s volatile. It’s just consistently low. Unidentified Analyst: Got it. That’s helpful. That really helps. Thanks so much. Jamie Lerner: Thanks. Operator: Your next question is coming from David Duley . Your line is live. David Duley: Yes. Thanks. Thanks for taking my question. Just a clarification. I think you mentioned without supply constraints that you would have shipped or you would have had revenue with much higher levels in the current quarter. I can’t – my phone had some technical difficulties, did you say that you would have hit the $98 million or you would hit the pre-COVID levels of like $105 million? Jamie Lerner: Yes, I would say more in the pre-COVID levels. We were above that mean sales execution for this quarter, we said $98 million plus or minus $3 million, so $101 million in the high end of the range, sales executed above that range, back at those pre-COVID numbers. David Duley: Yes, so without supply constraints would have been doing $105 million both in the March and the June quarter, or something greater than that? Jamie Lerner: Maybe not that high, but we were above $101 million. David Duley: Okay. Thank you for the clarification. Now, given the supply constraints that you’re seeing, is this like, are your large enterprise and hyperscale customers essentially getting you longer visibility and bringing you closer into their planning? So, that they don’t get surprised in the future from constraints from your sales? Jamie Lerner: Yes, I mean, one thing, I think we feel good, we’re not seeing is people playing – placing abnormally large orders just to try and to get supply. So, we’re not seeing like double orders or abnormally large orders. But we are seeing people giving us greater view into multiple quarters, for a long time you gave us an order and you received it in two weeks. So, people weren’t really conditioned to give us a whole lot of visibility now, because not only are we supply constrained but it’s pretty industry wide. I think we’re getting much better behavior where our customers, particularly our larger customers are giving us, some of them several quarters, and our bigger customers are giving us full year, full 12 months demand signal. And some of them are giving us 12 months demand signal and the purchase orders behind it in an attempt to get in the queue. So, we are seeing better visibility people are not just giving a signal, what they’re backing up the signal with POs, and I think the POs they’re putting on us are reasonable POs, and not just large numbers to try and hold down supply. So, we are getting better demand planning. David Duley: Right? So, for an assortment of reasons, right, you have new products and large customers want your products. But the fact is the current environment is basically forcing them to lay down their cards and give you much longer visibility than you’ve ever had before. Jamie Lerner: I think that’s a fair statement. David Duley: Okay, thank you. Jamie Lerner: All right. Thank you. Operator: Your next question is coming from Craig Ellis . Your line is live. Craig Ellis: Thanks for taking – yep, thanks for taking the follow-up. Just a couple quick ones. If I went back to the last call, I think we were thinking that at the time, we were shipping to three hyperscalers with the potential to go to four, either in the fiscal fourth or fiscal first quarter, but given the comments around the next gen of LTO coming up maybe in the September, October timeframe, does that mean that, that fourth hyperscaler would be closer to that timeframe? Or would we be potentially shipping inside of F1Q? Jamie Lerner: Yes, I mean, we’re loading up. I mean, the business is now at a point where we’re just not listing out each customer. We are doing business now with more than four hyperscalers, they’re at different levels of volumes. They’re purchasing more than just tape products. And we’re starting to work with groups that are somewhere between a webscaler and a hyperscaler. Right. So, we’re starting to sell now to businesses that are much larger than an enterprise maybe smaller than the top three or four hyperscalers. But they’re still enormous in nature. So, we’re just – we’re hitting with more customers. I think if you remember that pyramid slide, we used to just work with the top two or three hyperscalers in the world. Now, we’re dealing with large telcos. We’re dealing with large, different types of service providers, webscalers. So, I think the business is becoming a little more diversified. And what the biggest movement that I’m encouraged by is more and more of these large scale customers want our software as much as our hardware, and to the solution, discussion some of them are buying multiple products, certain hyperscalers also make movies and television, and they’re starting to buy our primary products. They’re starting to buy our media asset management and CatDV products. So, what started as a big hardware sale now where we have multiple lines of business, it’s just becoming a healthier and more diversified business. Craig Ellis: That’s helpful, Jamie and by the way, thanks for all the comments. Through the call, it’s clear that you guys are using a tough situation to advance on some of the longer term objectives of the company. You mentioned leadership a couple times. So, I just wanted to follow up on a recent appointment. Brian Cabrera, look like a real important add to the broader team, and I believe you did add some video surveillance Asia sales experts. So the question is from where you’ve got the organization set now? Where are we relative to having that optimal organization that you would envision and driving the business forward? Still more appointments to make or are we meaningfully there? Jamie Lerner: Yes, I mean, when it comes to leadership, I’m not sure you’re ever there. Right? You’re constantly evaluating. You’re constantly improving. And the situation is our company is in a very different place than it was even two years ago, even one year ago. Right. I mean, we’re growing in size, we’re growing in relevance. And so I think I’m constantly looking to put the very best leadership that we can find into the company. So, I think we have an amazing leadership team, I think it’s a stronger leadership team than you would normally see at a $500 million company, because we don’t see ourselves as building a $500 million company. We see ourselves as building a $5 billion company. And we put in that kind of a leadership team, and I’m going to continue to over hire, I mean, Brian was the GC at Nvidia. Brian Pawlowski hired before him was the CTO at NetApp. And we’re hiring the absolute best executives in this industry, because our goal is to be a heck of a lot more than a $500 million company. And three years ago, I wasn’t sure we could do it. But we have done so much in the last three years when we pick this company up and you remember the state it was in. And we’ve effectively 10x the market cap from our low point. And we think we’re going to 10x it again. But to do that, we’re going to need really strong leadership. We’re going to need to be able to drive through all these choppy waters. And we just need the most seasoned people we can find. And I’m not going to stop if we keep finding better talent. I’m going to upgrade bring on more leaders, every time I have that opportunity. Because I do think it’s leadership that makes the difference. Craig Ellis: That’s a great color. Thanks, Jamie. Operator: We have no further questions from the lines at this time. Jamie Lerner: All right. Well, I’d like to thank everyone for joining us today. Mike and I will be having calls with many of you. We always like to make ourselves available and just want to thank everyone and be safe. And hopefully we’ll be meeting again in person very soon. Thank you so much. Operator: Thank you, ladies and gentlemen, this does conclude today’s event. You may disconnect at this time. And have a wonderful day. Thank you for your participation.
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.
