Revenue Increased 9% Year-over-Year to
$97.1 Million; Subscription Customers
Grew 200% Year-over-Year
SAN
JOSE, Calif., Aug. 4, 2022
/PRNewswire/ -- Quantum Corporation (NASDAQ: QMCO) announced today
financial results for its fiscal first quarter ended June 30, 2022.
First Quarter Fiscal 2023
Financial Summary
- Revenue increased 9% year-over-year and 2% sequentially to
$97.1 million, which was above the
high-end of guidance
- Backlog at quarter end was $46.8
million, primarily reflecting the timing of large orders,
and subsequently increased to $67.2
million as of July 31,
2022
- Active subscription customers grew to over 450, an increase of
more than 200% year-over-year and 29% sequentially
- GAAP net loss was $10.6 million,
or ($0.13) per share; adjusted
non-GAAP net loss was $3.6 million,
or ($0.04) per share
- Adjusted EBITDA was $0.3
million
"Revenue was above the high-end of our guidance at $97.1 million, primarily driven by continued
robust demand from our hyperscale customers and significant growth
in our video surveillance business," stated Jamie Lerner, Chairman and CEO of Quantum. "With
all of Quantum's products now available as a software offering, we
continue to secure a growing number of subscription-based customers
that reached over 450 in the quarter, representing the fifth
consecutive sequential increase. As further evidence of our ongoing
progress to drive recurring revenue, subscription software ARR
expanded 11% sequentially to $8.2
million.
"During the quarter, we realized the initial benefits from our
enhanced supply chain strategies and cost reduction initiatives, as
demonstrated by our better than expected revenue results. Following
a series of cost reductions we implemented in June, operating
expenses decreased by $0.6 million
sequentially with a more significant reduction of $1.5 to $2.0
million per quarter expected in the second half of fiscal
2023.
"In summary, we have and continue to take the necessary steps to
improve the Company's financial profile and future operating
performance. Looking ahead to the coming quarter and year, we are
committed to disciplined execution on our initiatives aimed at
driving top-line growth as well as increased operational efficiency
and margin expansion, which together we expect to contribute to
higher adjusted EBITDA and earnings."
First Quarter Fiscal 2023 vs.
Prior Quarter
Revenue for the first quarter fiscal 2023 was $97.1 million compared to $95.2 million in the prior quarter. Gross profit
in the first quarter of fiscal 2023 was $34.0 million, or 35% of revenue, compared to
$36.2 million, or 38% of revenue, in
the fourth quarter of fiscal 2022. First quarter fiscal 2023 gross
margin reflected an anticipated peak in purchase price variance
driven from constraints in the supply chain combined with revenue
mix that was more heavily weighted towards hyperscale customers.
Assuming no meaningful deterioration in the overall market
environment or supply chain dynamics, the Company believes gross
margin in the first quarter represents a low-point from which
margins will improve during the fiscal year.
Total GAAP operating expenses in the first quarter of fiscal
2023 decreased to $41.1 million, or
42% of revenue, compared to $41.8
million, or 44% of revenue, in the prior quarter. Selling,
general and administrative expenses were $28.3 million in the quarter, flat compared to
the fourth fiscal quarter 2022. Research and development expenses
were $12.1 million in the first
quarter of fiscal 2023, compared to $13.5
million in the prior quarter. Non-GAAP operating expenses in
the first quarter of 2023 decreased to $36.3
million from $37.2 million in
the prior quarter.
GAAP net loss in the first quarter of fiscal 2023 was
$10.6 million, or ($0.13) per share, compared to a net loss of
$7.8 million, or ($0.13) per share, in the fourth fiscal quarter
2022. Excluding stock compensation, restructuring charges and other
non-recurring costs, non-GAAP adjusted loss in the first fiscal
quarter of 2023 was $3.6 million, or
($0.04) per share, compared to
adjusted net loss of $2.8 million, or
($0.05) per share, in the prior
quarter.
Adjusted EBITDA in the first quarter of fiscal 2023 was
$0.3 million, compared to
$0.4 million in the prior
quarter.
Balance Sheet and
Liquidity
- Cash and cash equivalents including restricted cash was
$26.8 million as of June 30, 2022, compared to $5.5 million as of March
31, 2022.
- During the quarter, the Company used proceeds from its
completed Rights Offering to pay down $20.0
million of outstanding long-term debt. A portion of the
proceeds were also used to fund working capital needs, which
included a primarily seasonality driven decrease in deferred
revenue of $13.6 million.
- Outstanding term loan debt was $78.4
million as of June 30, 2022,
compared to $98.7 million as of
March 31, 2022. Outstanding
borrowings on the Company's revolving credit facility were
$17.3 million as of June 30, 2022, compared to $17.7 million as of March
31, 2022.
- Total interest expense in the first quarter 2023 was
$2.1 million compared to $2.5 million in the prior quarter and
$3.9 million during the same quarter
a year ago.
Outlook
Based on currently committed supply, the Company expects the
following guidance range for the second fiscal quarter of 2023:
- Revenues of $95 million, plus or
minus $4 million
- Non-GAAP adjusted net loss of ($1.5
million), plus or minus $1
million
- Non-GAAP adjusted net loss per share of ($0.02), plus or minus $0.01
- Adjusted EBITDA of $2.5 million,
plus or minus $1 million
Conference Call and
Webcast
Management will host a live conference call today, August 4, 2022, at 5:00
p.m. ET (2:00 p.m. PT) to
discuss these results. The conference call will be accessible by
dialing 866-424-3436 (U.S. Toll-Free) or +1-201-689-8058
(International) and entering conference ID 13731301. This
conference call will be broadcast live over the Internet with a
slide presentation and can be accessed by all interested parties on
the investor relations section of the Company's website at
investors.quantum.com under the events and presentations tab.
A telephone replay of the conference call will be available
approximately two hours after the conference call and will be
available through August 11, 2022. To access the replay
dial 1-877-660-6853 and enter the conference ID 13731301 at the
prompt. International callers should dial +1-201-612-7415 and enter
the same conference ID. Following the conclusion of the live call,
a replay of the webcast will be available on the Company's website
for at least 90 days.
About Quantum
Quantum technology, software, and services provide the solutions
that today's organizations need to make video and other
unstructured data smarter – so their data works for them and not
the other way around. With over 40 years of innovation, Quantum's
end-to-end platform is uniquely equipped to orchestrate, protect,
and enrich data across its lifecycle, providing enhanced
intelligence and actionable insights. Leading organizations in
cloud services, entertainment, government, research, education,
transportation, and enterprise IT trust Quantum to bring their data
to life, because data makes life better, safer, and smarter.
Quantum is listed on Nasdaq (QMCO). For more information visit
www.quantum.com.
Quantum and the Quantum logo are registered trademarks of
Quantum Corporation and its affiliates in the United States and/or other countries. All
other trademarks are the property of their respective owners.
Forward-Looking
Information
The information provided in this press release may include
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934 ("Exchange Act"). These forward-looking statements are
largely based on our current expectations and projections about
future events and financial trends affecting our business. Such
forward-looking statements include, in particular, statements
related to future projections of our financial results; that our
newly introduced products will drive a growing contribution of
recurring revenue and deliver higher margins, while also increasing
the total addressable market of our solutions; our expectations to
continue our operational execution and to gain incremental traction
across our market verticals, including with our leading hyperscale
and global web scale customers, statements about our backlog and
the implication that this backlog will translate into future
revenue; the trend in our underlying business remaining robust;
continued progress in our business transformation; the anticipated
impact and benefits of our Pivot3 and EnCloudEn acquisitions; the
anticipated impact and benefits of the refinancing of our
outstanding debt; and the Company's position for long-term
sustainable growth and profitability.
These forward-looking statements may be identified by the use of
terms and phrases such as "anticipates", "believes", "can",
"could", "estimates", "expects", "forecasts", "intends", "may",
"plans", "projects", "targets", "will", and similar expressions or
variations of these terms and similar phrases. Additionally,
statements concerning future matters and other statements regarding
matters that are not historical are forward-looking statements.
Investors are cautioned that these forward-looking statements
relate to future events or our future performance and are subject
to business, economic, and other risks and uncertainties, both
known and unknown, that may cause actual results, levels of
activity, performance or achievements to be materially different
from those expressed or implied by any forward-looking
statements.
These forward-looking statements involve risks and uncertainties
that could cause actual results to differ materially from those
projected, including without limitation, the following: risks
related to the need to address the many challenges facing our
business; the potential impact of the COVID-19 pandemic on our
business, including potential disruptions to our supply chain,
employees, operations, sales and overall market conditions; the
competitive pressures we face; risks associated with executing our
strategy; the distribution of our products and the delivery of our
services effectively; our ability to integrate the business,
products, employees and other aspects of our Pivot3 and EnCloudEn
acquisitions; the development and transition of new products and
services and the enhancement of existing products and services to
meet customer needs and respond to emerging technological trends;
estimates and assumptions related to the cost (including any
possible disruption of our business) and the anticipated benefits
of the transformation and restructuring plans; the outcome of any
claims and disputes; and other risks that are described herein,
including but not limited to the items discussed in "Risk Factors"
in our filings with the Securities and Exchange Commission,
including our Form 10-K filed with the Securities and Exchange
Committee on June 8, 2022. The
Company does not intend to update or alter our forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by applicable law or
regulation.
Investor Relations Contacts:
Shelton
Group
Leanne K. Sievers | Brett L.
Perry
P: 949-224-3874 | 214-272-0070
E: sheltonir@sheltongroup.com
QUANTUM
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in thousands,
except per share amounts, unaudited)
|
|
|
June 30,
2022
|
|
March 31,
2022
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
26,528
|
|
$
5,210
|
Restricted
cash
|
255
|
|
283
|
Accounts receivable,
net of allowance for doubtful accounts of $195 and $422
|
64,909
|
|
69,354
|
Manufacturing
inventories
|
32,642
|
|
33,546
|
Service parts
inventories
|
25,129
|
|
24,254
|
Prepaid
expenses
|
10,715
|
|
7,853
|
Other current
assets
|
4,574
|
|
4,697
|
Total current
assets
|
164,752
|
|
145,197
|
Property and equipment,
net
|
14,093
|
|
12,853
|
Intangible assets,
net
|
8,420
|
|
9,584
|
Goodwill
|
12,969
|
|
12,969
|
Right-of-use assets,
net
|
10,641
|
|
11,107
|
Other long-term
assets
|
10,796
|
|
9,925
|
Total
assets
|
$
221,671
|
|
$
201,635
|
Liabilities and
Stockholders' Deficit
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
33,867
|
|
$
34,220
|
Deferred
revenue
|
74,267
|
|
86,517
|
Long-term debt,
current portion
|
5,000
|
|
4,375
|
Accrued
compensation
|
14,531
|
|
16,141
|
Other accrued
liabilities
|
14,157
|
|
16,562
|
Total current
liabilities
|
141,822
|
|
157,815
|
Deferred
revenue
|
40,196
|
|
41,580
|
Revolving credit
facility
|
17,300
|
|
17,735
|
Long-term debt, net of
current portion
|
69,195
|
|
89,448
|
Operating lease
liabilities
|
9,932
|
|
9,891
|
Other long-term
liabilities
|
12,013
|
|
11,849
|
Total
liabilities
|
290,458
|
|
328,318
|
Stockholders'
deficit
|
|
|
|
Preferred stock,
20,000 shares authorized; no shares issued and
outstanding
|
—
|
|
—
|
Common stock, $0.01
par value; 125,000 shares authorized; 90,606 and 60,433 shares
issued and outstanding
|
907
|
|
605
|
Additional paid-in
capital
|
714,128
|
|
645,038
|
Accumulated
deficit
|
(781,123)
|
|
(770,903)
|
Accumulated other
comprehensive loss
|
(2,699)
|
|
(1,423)
|
Total stockholders'
deficit
|
(68,787)
|
|
(126,683)
|
Total liabilities and
stockholders' deficit
|
$
221,671
|
|
$
201,635
|
QUANTUM
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
|
(in thousands,
except per share amounts, unaudited)
|
|
|
Three Months Ended
June 30,
|
|
2022
|
|
2021
|
Revenue:
|
|
|
|
Product
|
$
60,211
|
|
$
52,131
|
Service
and subscription
|
33,423
|
|
32,831
|
Royalty
|
3,440
|
|
4,137
|
Total
revenue
|
97,074
|
|
89,099
|
Cost of
revenue:
|
|
|
|
Product
|
47,921
|
|
38,741
|
Service
and subscription
|
15,105
|
|
13,080
|
Total cost of
revenue
|
63,026
|
|
51,821
|
Gross profit
|
34,048
|
|
37,278
|
Operating
expenses:
|
|
|
|
Research
and development
|
12,125
|
|
11,291
|
Sales and
marketing
|
15,962
|
|
13,952
|
General
and administrative
|
12,314
|
|
11,825
|
Restructuring charges
|
725
|
|
266
|
Total operating
expenses
|
41,126
|
|
37,334
|
Loss from
operations
|
(7,078)
|
|
(56)
|
Other income (expense),
net
|
751
|
|
(198)
|
Interest
expense
|
(2,091)
|
|
(3,886)
|
Loss on debt
extinguishment
|
(1,392)
|
|
—
|
Net loss before income
taxes
|
(9,810)
|
|
(4,140)
|
Income tax
provision
|
410
|
|
13
|
Net loss
|
$
(10,220)
|
|
$
(4,153)
|
Deemed dividend on
warrants
|
(389)
|
|
—
|
Net loss attributable
to common stockholders
|
$
(10,609)
|
|
$
(4,153)
|
|
|
|
|
Net loss per share
attributable to common stockholders
|
$
(0.13)
|
|
$
(0.07)
|
Weighted average shares
- basic and diluted
|
83,641
|
|
57,129
|
|
|
|
|
Net loss
|
$
(10,220)
|
|
$
(4,153)
|
Foreign currency
translation adjustments, net
|
(1,276)
|
|
267
|
Total comprehensive
loss
|
$
(11,496)
|
|
$
(3,886)
|
QUANTUM
CORPORATION
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in thousands,
unaudited)
|
|
|
Three Months Ended
June 30,
|
|
2022
|
|
2021
|
Operating
activities
|
|
|
|
Net loss
|
$
(10,220)
|
|
$
(4,153)
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities
|
|
|
|
Depreciation and
amortization
|
2,586
|
|
1,809
|
Amortization of debt
issuance costs
|
336
|
|
1,004
|
Loss on debt
extinguishment
|
992
|
|
—
|
Provision for product
and service inventories
|
1,631
|
|
976
|
Stock-based
compensation
|
3,069
|
|
3,201
|
Other
|
(1,469)
|
|
326
|
Changes in assets and
liabilities:
|
|
|
|
Accounts receivable,
net
|
4,677
|
|
15,207
|
Manufacturing
inventories
|
(412)
|
|
(3,769)
|
Service parts
inventories
|
(1,384)
|
|
(588)
|
Accounts
payable
|
(175)
|
|
(3,178)
|
Accrued restructuring
charges
|
39
|
|
(454)
|
Accrued
compensation
|
(1,610)
|
|
(4,852)
|
Deferred
revenue
|
(13,634)
|
|
(6,306)
|
Other current
assets
|
(2,739)
|
|
(5,291)
|
Other non-current
assets
|
(261)
|
|
41
|
Other current
liabilities
|
64
|
|
(1,545)
|
Other non-current
liabilities
|
164
|
|
706
|
Net cash used in
operating activities
|
(18,346)
|
|
(6,866)
|
Investing
activities
|
|
|
|
Purchases of property
and equipment
|
(3,036)
|
|
(1,150)
|
Deferred business
acquisition payment
|
(2,000)
|
|
—
|
Net cash used in
investing activities
|
(5,036)
|
|
(1,150)
|
Financing
activities
|
|
|
|
Repayments of
long-term debt and payment of amendment fees
|
(20,846)
|
|
(463)
|
Borrowings of credit
facility
|
109,740
|
|
56,544
|
Repayments of credit
facility and payment of amendment fees
|
(110,575)
|
|
(56,544)
|
Proceeds from issuance
of common stock, net
|
66,324
|
|
—
|
Net cash provided by
financing activities
|
44,643
|
|
(463)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
29
|
|
(14)
|
Net change in cash,
cash equivalents and restricted cash
|
21,290
|
|
(8,493)
|
Cash, cash equivalents,
and restricted cash at beginning of period
|
5,493
|
|
33,137
|
Cash, cash equivalents,
and restricted cash at end of period
|
$
26,783
|
|
$
24,644
|
Cash, Cash
Equivalents and Restricted Cash at end of period
|
Cash and cash
equivalents
|
$
26,528
|
|
$
19,102
|
Restricted cash,
current
|
255
|
|
542
|
Restricted cash,
long-term
|
—
|
|
5,000
|
Cash, cash equivalents
and restricted cash at the end of period
|
$
26,783
|
|
$
24,644
|
Supplemental
disclosure of cash flow information
|
|
|
|
Cash paid for
interest
|
$
1,863
|
|
$
2,860
|
Cash paid for income
taxes, net
|
$
115
|
|
$
294
|
Non-cash
transactions
|
|
|
|
Purchases of property
and equipment included in accounts payable
|
$
133
|
|
$
146
|
Transferred of manufacturing
inventory to services inventory
|
$
890
|
|
$
411
|
Transfer of manufacturing
inventory to property and equipment
|
$
193
|
|
$
65
|
Paid-in-kind
interest
|
$
319
|
|
$
—
|
Deemed dividend on
warrants
|
$
389
|
|
$
—
|
NON-U.S. GAAP FINANCIAL
MEASURES
To provide investors with additional information regarding our
financial results, we have presented Adjusted EBITDA and Adjusted
Net Income (Loss), non-U.S. GAAP financial measures defined
below.
Adjusted EBITDA is a non-U.S. GAAP financial measure defined by
us as net loss before interest expense, net, provision for income
taxes, depreciation and amortization expense, stock-based
compensation expense, restructuring charges, and other
non-recurring expenses.
"GAAP net loss" as referred to in this press release represents
"Net loss attributable to common stockholders". Adjusted Net Income
(Loss) is a non-U.S. GAAP financial measure defined by us as net
loss before restructuring charges, stock-based compensation
expense, and other non-recurring (income) expenses. The Company
calculates Adjusted Net Income (Loss) per Basic and Diluted share
using the Company's above-referenced definition of Adjusted Net
Income (Loss).
We have provided below a reconciliation of Adjusted EBITDA and
Adjusted Net Income (Loss) to Net Income (Loss), the most directly
comparable U.S. GAAP financial measure. We have presented Adjusted
EBITDA because it is a key measure used by our management and the
board of directors to understand and evaluate our core operating
performance and trends, to prepare and approve our annual budget
and to develop short and long-term operating plans. In particular,
we believe that the exclusion of the amounts eliminated in
calculating Adjusted EBITDA can provide a useful measure for
period-to-period comparisons of our core business performance. We
believe Adjusted Net Income (Loss) and Adjusted Net Income (Loss)
per Basic and Diluted Share serve as appropriate measures to be
used in evaluating the performance of our business and help our
investors better compare our operating performance over multiple
periods. Accordingly, we believe that Adjusted EBITDA and Adjusted
Net Income (Loss) provide useful information to investors and
others in understanding and evaluating our operating results in the
same manner as our management and our board of directors.
Our use of Adjusted EBITDA and Adjusted Net Income (Loss) have
limitations as analytical tools, and you should not consider them
in isolation or as a substitute for analysis of our financial
results as reported under U.S. GAAP. Some of these limitations are
as follows:
- Although depreciation and amortization expense are non-cash
charges, the assets being depreciated and amortized may have to be
replaced in the future, and Adjusted EBITDA does not reflect cash
capital expenditure requirements for such replacements or for new
capital expenditure requirements;
- Adjusted EBITDA does not reflect: (1) interest and tax payments
that may represent a reduction in cash available to us; (2) capital
expenditures, future requirements for capital expenditures or
contractual commitments; (3) changes in, or cash requirements for,
working capital needs; (4) the potentially dilutive impact of
stock-based compensation expense; (5) potential future costs
related to our long-term debt; (6) potential future restructuring
expenses; (7) potential future costs related to business
acquisitions; (8) gain (loss) on debt extinguishment, (9) and
acquisition-related amortization of intangibles assets from
business combinations, or (10) deemed dividend related to
warrants.
- Adjusted Net Income (Loss) does not reflect: (1) potential
future restructuring activities; (2) the potentially dilutive
impact of stock-based compensation expense; (3) potential future
costs related to our long-term debt; (4) potential future costs
related to business acquisitions; (5) gain (loss) on debt
extinguishment, (6) acquisition-related amortization of intangibles
assets from business combinations, or (7) deemed dividend related
to warrants.
Other companies, including companies in our industry, may
calculate Adjusted EBITDA, Adjusted Net Income (Loss) or similarly
titled measures differently, which reduces its usefulness as a
comparative measure.
Because of these and other limitations, you should consider
Adjusted EBITDA and Adjusted Net Income (Loss) along with other
U.S. GAAP-based financial performance measures, including various
cash flow metrics and our U.S. GAAP financial results.
The following is a reconciliation of Adjusted EBITDA to the most
comparable U.S. GAAP financial measure, Net Income (Loss) (dollars
in thousands):
|
Three Months Ended
June 30,
|
|
2022
|
|
2021
|
Net loss attributable
to common stockholders
|
$
(10,609)
|
|
$
(4,153)
|
Interest expense,
net
|
2,091
|
|
3,886
|
Provision for income
taxes
|
410
|
|
13
|
Depreciation
expense
|
1,422
|
|
1,343
|
Stock-based
compensation expense
|
3,069
|
|
3,201
|
Restructuring
charges
|
725
|
|
266
|
Loss on extinguishment
of Senior Secured Term Loan
|
1,392
|
|
—
|
Amortization of
acquisition related intangible assets
|
1,164
|
|
465
|
Acquisition-related
costs
|
127
|
|
139
|
Long-term debt related
costs
|
166
|
|
207
|
Deemed dividend related
to warrants
|
389
|
|
|
Adjusted
EBITDA
|
$
346
|
|
$
5,367
|
|
|
|
|
The following is a
reconciliation of Adjusted Net Income to the most comparable U.S.
GAAP financial measure, Net Income (Loss) (in
thousands):
|
|
Three Months Ended
June 30,
|
|
2022
|
|
2021
|
Net loss attributable
to common stockholders
|
$
(10,609)
|
|
$
(4,153)
|
Stock-based
compensation
|
3,069
|
|
3,201
|
Restructuring
charges
|
725
|
|
266
|
Loss on extinguishment
of Senior Secured Term Loan
|
1,392
|
|
—
|
Amortization of
acquisition related intangible assets
|
1,164
|
|
465
|
Acquisition-related
costs
|
127
|
|
139
|
Long-term debt related
costs
|
166
|
|
207
|
Deemed dividend related
to warrants
|
389
|
0
|
—
|
Adjusted
net income (loss)
|
$
(3,577)
|
|
$
125
|
|
|
|
|
Adjusted
Net Income (Loss) per share:
|
|
|
|
Basic
|
$
(0.04)
|
|
$
0.00
|
Diluted
|
$
(0.04)
|
|
$
0.00
|
Weighted
average shares outstanding:
|
|
|
|
Basic
|
83,641
|
|
50,129
|
Diluted
|
83,641
|
|
68,565
|
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SOURCE Quantum Corp.