Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Quantum Corp (QMCO, Financial) achieved breakeven adjusted EBITDA for the quarter, indicating improved operational efficiency.
- The company reported a significant improvement in GAAP gross margin, increasing by 490 basis points sequentially to 41.5%.
- Quantum Corp (QMCO) has reduced non-GAAP operating expenses by approximately 9% year over year, showcasing effective cost management.
- The company has a strong focus on innovation, with new products like the DXi T-Series All-Flash data protection appliance and Scalar i7 RAPTOR supporting AI use cases.
- Quantum Corp (QMCO) has crossed over 1,000 customers on subscription, indicating growth in its recurring revenue model.
Negative Points
- Revenue for the quarter was $70.5 million, a decrease of approximately 7% year over year, reflecting challenges in primary storage solutions.
- The company faced ongoing supply chain issues, leading to an elevated backlog of approximately $14 million.
- GAAP net loss for the second quarter was $13.5 million, or a loss of $2.82 per share, including onetime expenses related to debt and restructuring.
- Quantum Corp (QMCO) anticipates continued operational headwinds, including a transition to a new manufacturing partner.
- The company's win rates have slightly decreased from prior years, impacting overall revenue execution.
Q & A Highlights
Q: Can you elaborate on the revenue shortfall and the supply chain issues affecting Quantum Corp?
A: Jamie Lerner, CEO, explained that the sales team secured the necessary purchase orders, but the transition to high-speed all-flash systems, which have longer lead times, contributed to the backlog. The lead times for SSDs and high-speed servers have increased from two to three weeks to up to 10 weeks. Quantum is preordering equipment to mitigate this but is cautious to avoid excess inventory.
Q: What are the key performance indicators for Myriad and ActiveScale that indicate progress?
A: Kenneth Gianella, CFO, noted significant pipeline growth quarter-over-quarter, with over 1,000 customers now on subscription software. Jamie Lerner added that DXi products are performing well, with sales accelerating faster than anticipated due to innovation in their product lines.
Q: What are the expectations for cash flow in the upcoming quarters?
A: Kenneth Gianella stated that while they are not providing exact numbers, the company expects to be cash flow positive in the second half of FY25. This is due to reduced CapEx and restructuring costs, which have been significant over the past two years.
Q: Are there different conversion rates for the pipeline by product, particularly for Myriad and ActiveScale?
A: Kenneth Gianella mentioned that ActiveScale's win rates are consistent with prior years, while enterprise tape business saw a dip. However, DXi products are seeing significant growth, driven by innovation and a lack of competition from larger peers like Dell.
Q: Will the elevated backlog continue into the March quarter, and how does it affect fiscal year '25 guidance?
A: Kenneth Gianella indicated that the backlog might persist due to ongoing supply chain headwinds and a factory transition. These factors are considered in their guidance, which anticipates typical March quarter seasonality.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
