- Revenue: $311.6 million, a decrease of approximately 26% year over year.
- Gross Margin: Increased 614 basis points to 40% on a GAAP basis over the prior year.
- GAAP Net Loss: $41.3 million or a loss of $0.43 per share.
- Non-GAAP Adjusted Net Loss: $27.5 million or $0.29 loss per share.
- Adjusted EBITDA: Negative $5.3 million, down approximately $26.4 million from the prior year.
- Cash, Cash Equivalents, and Restricted Cash: Approximately $25.7 million as of fiscal year ending March 31, 2024.
- Outstanding Debt: $87.9 million (term) and $26.6 million (revolver).
- Net Debt Position: $88.6 million.
- Total Annual Recurring Revenue (ARR): $144.9 million, approximately 46% of total revenue.
- Subscription Portion of ARR: Increased approximately 33% year over year to $17.8 million.
- First Quarter Fiscal '25 Revenue Guidance: Approximately $72 million, plus or minus $2 million.
- First Quarter Fiscal '25 Non-GAAP Adjusted Net Loss Per Share Guidance: Negative $0.09, plus or minus $0.02 per share.
- First Quarter Fiscal '25 Adjusted EBITDA Guidance: Approximately negative $2 million.
- First Quarter Fiscal '25 Gross Margin Guidance: Approximately 40%.
- First Quarter Fiscal '25 Non-GAAP Operating Expense Guidance: Approximately $33 million.
- Full Year Fiscal '25 Revenue Guidance: Approximately $310 million, plus or minus $10 million.
- Full Year Fiscal '25 Adjusted EBITDA Guidance: Approximately $15 million, plus or minus $5 million.
- Full Year Fiscal '25 Free Cash Flow Guidance: Expected to be positive.
Release Date: June 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Quantum Corp (QMCO, Financial) has made significant progress in improving its capital structure and paying down debt, including a $12.3 million debt reduction from asset sales.
- The company has achieved a 600 basis point increase in gross margin year over year, reflecting improved operational efficiencies.
- Quantum Corp (QMCO) has seen a 33% year-over-year increase in subscription-based annual recurring revenue (ARR), with a near 100% renewal rate.
- The company has launched Quantum GO, a scalable subscription model aimed at meeting increasing data management needs, particularly in AI and machine learning.
- Quantum Corp (QMCO) has expanded its global partnerships and revamped its sales organization to drive growth in new product offerings and higher-margin revenue streams.
Negative Points
- Revenue for fiscal 2024 was $311.6 million, a decrease of approximately 26% year over year, primarily due to the loss of its largest hyperscale customer.
- The company reported a GAAP net loss of $41.3 million for fiscal 2024, significantly higher than the $18.4 million loss in the prior year.
- Adjusted EBITDA for fiscal 2024 was a negative $5.3 million, reflecting lower-than-anticipated revenue and gross profit.
- Quantum Corp (QMCO) is still in the process of completing its financial close process and restatement, with unaudited results subject to potential material adjustments.
- The company faces ongoing challenges in stabilizing its legacy business, particularly in tape media and hyperscale solutions, which have seen significant declines.
Q & A Highlights
Q: When can we expect audited results?
A: Kenneth Gianella, CFO: The numbers are complete, and we don't anticipate any material adjustments. We expect to have the audited results out to shareholders in the next few days, aiming for a July 1 deadline.
Q: What led to the revenue decline from your largest hyperscaler customer?
A: Kenneth Gianella, CFO: The hyperscaler wanted a custom solution that didn't align with our business model. They sought a contract manufacturing model with 3-5% margins and required us to contribute our intellectual property, which we declined.
Q: Are there plans for additional non-core asset sales?
A: Kenneth Gianella, CFO: Yes, we are evaluating further opportunities, including inventory and intellectual property, to focus on ActiveScale and Myriad and reduce debt.
Q: When do you expect to be adjusted EBITDA positive and cash flow positive?
A: Jamie Lerner, CEO: We anticipate being adjusted EBITDA positive starting in Q2 and beyond, driven by cost containment and efficiency rather than sales growth.
Q: What are the revenue expectations for ActiveScale and Myriad in fiscal year 2025?
A: Jamie Lerner, CEO: ActiveScale is currently the fastest-growing product, and Myriad is expected to follow closely. We see high demand and significant attach rates between Myriad and ActiveScale, leading to higher ASPs and margins.
Q: How will the loss of hyperscale revenue impact fiscal year 2025?
A: Jamie Lerner, CEO: The headwind will be felt in Q1, but we expect a slight uptick in Q2. The decline will be offset by growth in primary storage, Myriad, and ActiveScale, along with stabilizing legacy business.
Q: What is the status of covenant waivers?
A: Jamie Lerner, CEO: We are working with our lenders and expect to resolve this within the next 60 to 90 days. We aim to sell more non-strategic assets, reduce debt, and secure more flexible financing options.
Q: How are you addressing product gross margin pressures?
A: Jamie Lerner, CEO: We expect product margins to improve as we focus on subscription-based and service revenue. The shift to subscription models impacts product revenue but enhances overall profitability.
Q: What are your plans for future growth and profitability?
A: Jamie Lerner, CEO: We are focusing on stabilizing legacy business, growing Myriad and ActiveScale, and improving operational efficiency. These efforts are expected to drive profitability and positive cash flow in fiscal year 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
