Quantum: Fiscal 2FQ25 Financial Results

Quantum Corporation, announced financial results for its fiscal second quarter 2025 ended September 30, 2024.

2FQ25 Financial Summary

• Revenue was $70.5 million
• GAAP gross profit was $29.3 million, or 41.5% of revenue
• GAAP net loss was $13.5 million, or ($2.82) per share
• Subscription ARR was up 28% Y/Y at $19.6 million
• Adjusted non-GAAP net loss was $8.7 million, or ($1.82) per share
• Adjusted EBITDA was approximately breakeven

“Sales bookings and customer win rates for the quarter were consistent with our overall business expectations as we continued to transform the company,” stated Jamie Lerner, chairman and CEO. “However, operational headwinds with the supply chain continued this quarter, resulting in exiting the quarter with higher than anticipated backlog. Evidence of our transformation can be seen in the progress of gross margin improving 490 basis points sequentially to above 41%, as well as non-GAAP operating expenses being reduced by more than 8% Y/Y. These actions contributed to our achievement of breakeven adjusted EBITDA for the quarter.”

“Our business strategy remains focused on high-priority growth initiatives, particularly around Myriad and ActiveScale as we are seeing demonstrated proof points of our ability to expand within our target verticals. In 2FQ25, we achieved significant pipeline growth for Myriad and ActiveScale. An existing Quantum customer who was looking for a comprehensive solution with high-speed primary storage and a secure, cost-efficient, long-term storage solution purchased our Myriad and ActiveScale Cold Storage products, as a Quantum Go subscription. Additionally, as we maintain a strong base with our data protection offerings, Quantum’s recently launched DXi T-Series is the only solution in the market offering robust cyber-resilient features in a 1U, all-flash data protection appliance. We’ve had multiple strategic wins vs. the competition based on the DXi T-Series fast recovery times in the face of a cyberattack due to its leading data reduction and recovery rates. This is a testament to our continued investment in innovation and our laser focus on allowing our customers to recognize the value in their data.”

“While our efforts are still short of the intended results, we are seeing positive proof points through our new product introductions, including Myriad traction, combined with driving a more operationally efficient business.“

2FQ25 Vs. 2FQ24
Revenue for 2FQ25 was $70.5 million, compared to $75.7 million in 2FQ24, largely reflecting lower revenue contribution from primary storage. GAAP gross profit in 2FQ25 was $29.3 million, or 41.5% of revenue, compared to $32.7 million, or 43.3% of revenue, in 2FQ24.

Total GAAP operating expenses in 2FQ25 were $36.2 million, or 51.4% of revenue, compared to $36.4 million, or 48.1% of revenue, in 2FQ24. Selling, general and administrative expenses were $27.6 million, compared to $25.9 million in 1FQ25 primarily driven by increased non-recurring new ERP systems spend along with accounting and tax work. R&D expenses in 2FQ25 were $8.3 million, compared to $9.2 million in 1FQ25. Non-GAAP operating expenses in 2FQ25 were $30.4 million, compared to $33.3 million in 2FQ24.

GAAP net loss in 2FQ25 was $13.5 million, or ($2.82) per share, which included a loss on debt extinguishment of $2.3 million and negative $1.2 million non-cash intercompany foreign currency adjustment, and compared to a GAAP net loss of $3.3 million, or ($0.70) per share in 1FQ25. Excluding the income statement impact of the warrants, stock compensation, restructuring charges, and other non-recurring costs, non-GAAP adjusted net loss in 2FQ25 was $8.7 million, or ($1.82) per share, compared to an adjusted net loss of $4.4 million, or ($0.93) per share in 2FQ24.

Adjusted EBITDA in 2FQ25 was essentially breakeven at ($0.3) million, compared to $1.7 million in 2FQ24 and a $3.0 million improvement Q/Q.

Liquidity and Debt (as of September 30, 2024)

• Cash, cash equivalents and restricted cash were $17.0 million, compared to $25.8 million as of September 30, 2023.
• Total interest expense for 2FQ25 was $6.1 million, compared to $3.9 million for 2FQ24.
• Outstanding term loan debt, excluding debt issuance costs, was $104.7 million, compared to $87.9 million as of September 30, 2023. Outstanding borrowings on revolving credit facility was $28.3 million, compared to $21.5 million as of September 30, 2023.

For 3FQ25, the company expects the following guidance:

• Revenues of $72.0 million, ±$2.0 million
• Non-GAAP adjusted basic net loss per share of ($0.75), ±$0.05
• Adjusted EBITDA of approximately $2.0 million
• This assumes an effective annual tax rate of negative 3%; non-GAAP adjusted net loss per share assumes an average basic share count of approximately 4.8 million in 3FQ25.