Execution on Business Transformation Drives
Significant Year-Over-Year Improvements
Takes Initial Step on Path Toward Becoming
Debt-Free
Quantum Corporation (Nasdaq: QMCO) ("Quantum" or the "Company"),
a leader in solutions for AI and unstructured data, announced today
financial results for its fiscal third quarter 2025 ended December
31, 2024.
Fiscal Third Quarter 2025 Financial Summary
- Revenue increased to $72.6 million
- Subscription ARR was up 29% year-over-year at $21.3
million
- GAAP gross profit increased to $31.8 million, or gross margin
of 43.8%
- GAAP net loss was $71.4 million, or ($14.56) per share, which
included a non-cash adjustment of $61.6 million to the fair market
value of warrant liabilities
- Adjusted non-GAAP net loss was $4.0 million, or ($0.81) per
share
- Adjusted EBITDA was $4.7 million, a $5 million improvement
sequentially
“Third quarter revenue increased sequentially and was above the
midpoint of guidance, as recent bookings momentum and customer wins
were converted into realized sales,” commented Jamie Lerner,
Chairman and CEO of Quantum. “As clear evidence of the benefits
from our self-help actions, this quarter we achieved positive
adjusted EBITDA of $4.7 million, well above our expectations, and
generated improving free cash flow. Contributing to these results
was gross margin expanding 230 basis points sequentially to almost
44%, combined with a significant reduction in operating
expenses.
“A fundamental component of our overall business transformation
has been significantly reducing the company’s outstanding debt
toward achieving financial independence and eliminating the
associated costly burdens of interest and fees. Consistent with
this objective, we recently entered into a standby equity purchase
agreement with a new financial partner that solidifies access to
additional capital and liquidity. We believe this strategic
transaction will facilitate both a stronger balance sheet and lower
cost structure through a staged reduction of the company’s
outstanding debt, while also providing increased flexibility to
execute on and accelerate our ongoing growth initiatives.
”Also during the quarter, we continued to gain traction with the
success of our new DXi data protection appliances, which provide
one of the most competitive solutions in their market. Recent
notable wins included a multi-million dollar installed base refresh
at a top European retailer as well as new business at a
multinational technology manufacturing company. Additionally, we
extended the momentum with our ActiveScale solution at new and
existing customers, including a 7-figure win with a Japanese
research institute and a prominent cloud service provider during
the quarter. Our Myriad product also continues to be at the
forefront of innovation as we collaborated with a leader in the
advancement of AI currently fusing quantum computing-inspired
algorithms and AI/ML to tackle problems once deemed unsolvable.
“In summary, this quarter represented tangible evidence of
improved financial performance from our ongoing business
transformation and operational efficiency initiatives over the past
year. Although there is still additional work to be done in order
to deliver consistently improving results, we believe we are on the
right path toward achieving this goal. As we take additional steps
to drive higher quality revenue and reduce the company’s debt, we
believe Quantum is well positioned to deliver increasing
profitability and cash flow in the coming years.”
Fiscal Third Quarter 2025 vs. Prior Fiscal Year
Quarter
Revenue for the fiscal third quarter of 2025 was $72.6 million,
compared to $71.9 million in the fiscal third quarter of 2024. GAAP
gross profit in the third quarter of 2025 was $31.8 million, or
43.8% of revenue, compared to $29.2 million, or 40.6% of revenue,
in the prior fiscal year quarter.
Total GAAP operating expenses in the fiscal third quarter of
2025 were $35.6 million, or 49.1% of revenue, compared to $35.4
million, or 49.2% of revenue, in the fiscal third quarter of 2024.
Selling, general and administrative expenses were $26.6 million,
compared to $26.1 million in the prior fiscal year quarter.
Research and development expenses in the fiscal third quarter of
2025 were $7.7 million, compared to $8.8 million in the prior
fiscal year quarter. Non-GAAP operating expenses in the third
quarter of 2025 were $30.1 million, compared to $32.0 million in
the fiscal third quarter of 2024.
GAAP net loss in the third quarter of fiscal 2025 was $71.4
million, or ($14.56) per share, which included a $61.6 million loss
related to the adjustment to the fair market value of warrants
liabilities and a positive $2.3 million non-cash intercompany
foreign currency adjustment, compared to a GAAP net loss of $9.9
million, or ($2.08) per share, in the prior fiscal year quarter.
Excluding the income statement impact of the warrants, stock
compensation, restructuring charges, and other non-recurring costs,
non-GAAP adjusted net loss in the quarter was $4.0 million, or
($0.81) per share, compared to an adjusted net loss of $8.5
million, or ($1.79) per share, in the fiscal third quarter of
2024.
Adjusted EBITDA in fiscal third quarter 2025 was $4.7 million,
compared to ($2.6) million in the third quarter of fiscal year
2024, and an approximately $5.0 million improvement
sequentially.
For a reconciliation of GAAP to non-GAAP financial results,
please see the financial reconciliation tables below.
Liquidity and Debt (as of December 31, 2024)
- Cash, cash equivalents and restricted cash were $20.6 million,
compared to $24.5 million as of December 31, 2023.
- Total interest expense for the third quarter was $6.8 million,
compared to $3.9 million for the same period a year ago.
- Outstanding term loan debt, excluding debt issuance costs, was
$105.9 million, compared to $87.3 million as of December 31, 2023.
Outstanding borrowings on revolving credit facility were $37.5
million, compared to $32.0 million as of December 31, 2023.
Purchase Agreement
The Company has been exploring several strategic and financial
initiatives to pay down and eliminate its current outstanding debt,
which would also help to lower the cost structure, including
lowering interest expense and other fees the Company has
incurred.
On February 11, 2025, the Company’s registration statement on
Form S-1 registering up to approximately 2.3 million shares for
resale of shares issued or to be issued and sold to YA II PN, Ltd.
(a fund managed by Yorkville Advisors Global, LP.) pursuant to the
standby equity purchase agreement (the “Purchase Agreement”) was
declared effective by the Securities and Exchange Commission. The
Purchase Agreement provides Quantum with the flexibility to support
ongoing operations and accelerate growth initiatives with no more
than approximately 1.15 million shares of common stock of the
Company issuable under the Purchase Agreement until shareholder
approval is obtained. There is no obligation for Quantum to sell
any shares under the Purchase Agreement, and the Company retains
control over both timing and volume of any future issuances.
Guidance
For the fiscal fourth quarter of 2025, the Company expects the
following guidance:
- Revenue of $66 million, plus or minus $2.0 million
- Non-GAAP adjusted basic net loss per share of ($1.16), plus or
minus $0.05
- Adjusted EBITDA of approximately $1.7 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 5.8 million in the fiscal fourth quarter of
2025.
Conference Call and Webcast
Management will host a live conference call today, February 12,
2025, 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 13751306. 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 February 26, 2025. To access the replay dial
1-877-660-6853 and enter the conference ID 13751306 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 at
www.quantum.com for at least 90 days.
About Quantum
Quantum delivers end-to-end data management solutions designed
for the AI era. With over four decades of experience, our data
platform has allowed customers to extract the maximum value from
their unique, unstructured data. From high-performance ingest that
powers AI applications and demanding data-intensive workloads, to
massive, durable data lakes to fuel AI models, Quantum delivers the
most comprehensive and cost-efficient solutions. Leading
organizations in life sciences, government, media and
entertainment, research, and industrial technology trust Quantum
with their most valuable asset – their data. 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. 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, including for the fourth
fiscal quarter of 2025; the anticipated benefits of the Purchase
Agreement; our belief that we are well positioned to deliver
increasing profitability and cash flow in the coming years; and our
focus, goals, opportunities and strategy.
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 impact macroeconomic and inflationary conditions 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; 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,
including equity and debt financing options; the outcome of any
claims and disputes; the ability to meet stock exchange continued
listing standards; risks related to our ability to implement and
maintain effective internal control over financial reporting in the
future; 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 (the “SEC”), including
our Annual Report on Form 10-K filed with the SEC on June 28, 2024,
and any subsequent reports filed with the SEC. We do 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.
QUANTUM CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except per
share amounts, unaudited)
December 31, 2024
March 31, 2024
Assets
Current assets:
Cash and cash equivalents
$
20,381
$
25,692
Restricted cash
222
168
Accounts receivable, net of allowance for
credit losses of $99 and $22, respectively
61,373
67,788
Manufacturing inventories
18,861
17,753
Service parts inventories
1,884
9,783
Prepaid expenses
2,569
2,186
Other current assets
8,538
8,414
Total current assets
113,828
131,784
Property and equipment, net
11,268
12,028
Goodwill
12,969
12,969
Intangible assets, net
509
1,669
Right-of-use assets
8,670
9,425
Other long-term assets
20,812
19,740
Total assets
$
168,056
$
187,615
Liabilities and Stockholders’
Deficit
Current liabilities:
Accounts payable
$
34,704
$
26,087
Accrued compensation
11,702
18,214
Deferred revenue, current portion
69,916
78,511
Term debt
98,609
82,496
Revolving credit facility
37,500
26,604
Warrant liabilities
34,005
4,046
Other accrued liabilities
19,108
13,986
Total current liabilities
305,544
249,944
Deferred revenue, net of current
portion
35,350
38,176
Operating lease liabilities
9,067
9,621
Other long-term liabilities
13,150
11,372
Total liabilities
363,111
309,113
Stockholders' deficit
Preferred stock, 20,000 shares authorized;
no shares issued and outstanding
—
—
Common stock, $0.01 par value; 225,000
shares authorized; 5,307 and 4,792 shares issued and
outstanding
53
48
Additional paid-in capital
740,521
708,027
Accumulated deficit
(933,160
)
(827,380
)
Accumulated other comprehensive loss
(2,469
)
(2,193
)
Total stockholders’ deficit
(195,055
)
(121,498
)
Total liabilities and stockholders’
deficit
$
168,056
$
187,615
QUANTUM CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per
share amounts, unaudited)
Three Months Ended December
31,
Nine Months Ended December
31,
2024
2023
2024
2023
Revenue:
Product
$
38,610
$
37,113
$
116,389
$
138,635
Service and subscription
31,615
32,771
90,383
94,229
Royalty
2,326
2,042
7,592
7,235
Total revenue
72,551
71,926
214,364
240,099
Cost of revenue:
Product
30,922
30,044
93,251
105,214
Service and subscription
9,874
12,701
33,954
37,329
Total cost of revenue
40,796
42,745
127,205
142,543
Gross profit
31,755
29,181
87,159
97,556
Operating expenses:
Sales and marketing
12,448
14,244
39,321
45,800
General and administrative
14,142
11,893
49,186
34,833
Research and development
7,683
8,763
24,255
28,828
Restructuring charges
1,342
497
2,916
3,164
Total operating expenses
35,615
35,397
115,678
112,625
Loss from operations
(3,860
)
(6,216
)
(28,519
)
(15,069
)
Other income (expense), net
967
(1,419
)
(408
)
(2,049
)
Interest expense
(6,840
)
(3,937
)
(16,761
)
(10,992
)
Change in fair value of warrant
liabilities
(61,630
)
2,213
(56,414
)
7,341
Loss on debt extinguishment
—
—
(3,003
)
—
Net loss before income taxes
(71,363
)
(9,359
)
(105,105
)
(20,769
)
Income tax provision
70
510
675
1,573
Net loss
$
(71,433
)
$
(9,869
)
$
(105,780
)
$
(22,342
)
Net loss per share - basic and diluted
$
(14.56
)
$
(2.08
)
$
(21.90
)
$
(4.74
)
Weighted average shares - basic and
diluted
4,907
4,751
4,831
4,717
Net loss
(71,433
)
$
(9,869
)
(105,780
)
$
(22,342
)
Foreign currency translation adjustments,
net
(1,077
)
1,465
(276
)
994
Total comprehensive loss
$
(72,510
)
$
(8,404
)
$
(106,056
)
$
(21,348
)
QUANTUM CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands,
unaudited)
Nine Months Ended December
31,
2024
2023
Operating activities
Net loss
$
(105,780
)
$
(22,342
)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization
4,440
7,593
Amortization of debt issuance costs
3,704
1,948
Loss on debt extinguishment
3,003
—
Provision for product and service
inventories
1,165
3,328
Stock-based compensation
2,376
3,741
Paid in kind interest
3,515
1,401
Change in fair value of warrant
liabilities
56,408
(7,340
)
Other non-cash
(281
)
1,609
Changes in assets and liabilities:
Accounts receivable, net
6,337
12,616
Manufacturing inventories
(2,347
)
(3,099
)
Service parts inventories
7,972
(1,520
)
Prepaid expenses
(382
)
394
Accounts payable
9,405
(13,226
)
Accrued compensation
(6,512
)
(425
)
Deferred revenue
(11,421
)
(4,780
)
Other current assets
(124
)
(1,698
)
Other non-current assets
1,367
(1,532
)
Other current liabilities
5,369
569
Other non-current liabilities
1,441
2,036
Net cash used in operating activities
(20,345
)
(20,727
)
Investing activities
Purchases of property and equipment
(4,324
)
(5,025
)
Net cash used in investing activities
(4,324
)
(5,025
)
Financing activities
Borrowings of long-term debt, net of debt
issuance costs
25,000
14,083
Repayments of long-term debt
(14,092
)
(4,497
)
Borrowings of credit facility
311,135
318,223
Repayments of credit facility
(302,628
)
(303,671
)
Net cash provided by financing
activities
19,415
24,138
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(3
)
(12
)
Net change in cash, cash equivalents and
restricted cash
(5,257
)
(1,626
)
Cash, cash equivalents, and restricted
cash at beginning of period
25,860
26,175
Cash, cash equivalents, and restricted
cash at end of period
$
20,603
$
24,549
The following table provides a
reconciliation of cash, cash equivalents and restricted cash
reported within the consolidated balance sheets that sum to the
total of the same such amounts shown in the statement of cash
flows:
Cash and cash equivalents
20,381
$
24,377
Restricted cash, current
222
172
Cash and cash equivalents at the end of
period
$
20,603
$
24,549
Supplemental disclosure of cash flow
information
Cash paid for interest
$
8,841
$
9,154
Cash paid for income taxes, net
$
1,798
$
1,136
Non-cash transactions
Purchases of property and equipment
included in accounts payable
$
88
$
164
Paid-in-kind interest
$
3,515
$
1,401
NON-GAAP FINANCIAL MEASURES
To provide investors with additional information regarding our
financial results, we have presented certain non-GAAP financial
measures in this press release, including non-GAAP adjusted net
loss, adjusted EBITDA and non-GAAP operational expenses.
Adjusted EBITDA is a non-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, amortization of acquisition-related
intangible assets, loss on debt extinguishment, non-recurring
project costs, including restatement and debt-related matters and
fair value of warrants adjustments.
“GAAP net loss” as referred to in this press release represents
“Net loss attributable to common stockholders”. Non-GAAP adjusted
net income (loss) is a non-GAAP financial measure defined by us as
net loss before restructuring charges, stock-based compensation
expense, amortization of acquisition-related intangible assets,
loss on debt extinguishment, non-recurring project costs, including
restatement and debt-related matters and fair value of warrants
adjustments. We calculate adjusted net income (loss) per basic and
diluted share using the above-referenced definition of adjusted net
income (loss).
We have provided below reconciliations of adjusted EBITDA to
adjusted net income (loss), non-GAAP gross profit and non-GAAP
operational expenses, to the most directly comparable U.S. GAAP
financial measures. 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. For example, in the quarter ended
June 30, 2024, we excluded the costs associated with the
restatement of financial statements for fiscal year 2022, fiscal
year 2023 and associated quarters, and the first fiscal quarter of
2024. We do not believe these expenses are reasonably likely to
reoccur in the foreseeable future and do not believe it is
indicative of our ongoing operations; accordingly, we have excluded
the impact from our non-GAAP results. 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 the use of non-GAAP financial measures 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 non-GAAP financial measures 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) fair market adjustments related to
the Company’s 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) fair market adjustments
related to the Company’s warrants.
Other companies, including companies in our industry, may
calculate non-GAAP financial 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.
In addition, this press release includes forward-looking
non-GAAP adjusted earnings or net loss per share and adjusted
EBITDA, each a non-GAAP measure used to describe our expected
performance. We have not presented a reconciliation of these
anticipated non-GAAP measures to our most comparable GAAP financial
measures, because the reconciliation could not be prepared without
unreasonable effort. The information necessary to prepare the
reconciliations is not available on a forward-looking basis and
cannot be accurately predicted. The unavailable information could
have a significant impact on the calculation of the comparable GAAP
financial measure.
The tables below reconcile the non-GAAP financial measures of
adjusted EBITDA, net income, diluted EPS, operating expenses and
gross margin with the most directly comparable GAAP financial
measures (in thousands, unaudited).
Adjusted EBITDA
Three Months Ended December
31,
Nine Months Ended December
31,
(in thousands)
2024
2023
2024
2023
GAAP net loss
$
(71,433
)
$
(9,878
)
$
(105,780
)
$
(22,351
)
Provision for income taxes
70
510
675
1,573
Interest expense, net
6,984
3,937
17,146
10,993
Depreciation expense
1,737
1,466
5,007
4,639
Amortization of acquisition-related
intangible assets
233
832
1,160
2,954
Stock-based compensation expense
735
905
2,376
3,736
Fair value of warrants adjustments
61,630
(2,213
)
56,414
(7,341
)
Restructuring charges
1,845
496
4,455
3,163
Loss on debt extinguishment
—
—
3,003
—
Debt costs
592
—
1,819
—
Non-recurring project costs
2,322
1,343
15,050
3,196
Adjusted EBITDA
$
4,715
$
(2,602
)
$
1,325
$
562
Non-GAAP adjusted net loss and net loss
per share
Three Months Ended December
31,
Nine Months Ended December
31,
(in thousands)
2024
2023
2024
2023
GAAP net loss
$
(71,433
)
$
(9,878
)
$
(105,780
)
$
(22,351
)
Amortization of acquisition-related
intangible assets
233
832
1,160
2,954
Fair value of warrants adjustments
61,630
(2,213
)
56,414
(7,341
)
Stock-based compensation expense
735
905
2,376
3,736
Restructuring charges
1,845
496
4,455
3,163
Loss on debt extinguishment
—
—
3,003
—
Non-recurring interest expense
116
—
356
—
Debt costs
592
—
1,819
—
Non-recurring project costs
2,322
1,343
15,050
2,790
Adjusted net loss
$
(3,960
)
$
(8,515
)
$
(21,147
)
$
(17,049
)
Adjusted net loss per share – basic and
diluted
$
(0.81
)
$
(1.79
)
$
(4.38
)
$
(3.61
)
Weighted average shares – basic and
diluted
4,907
4,751
4,831
4,717
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250212387842/en/
Investor Relations Contacts:
Shelton Group Leanne K. Sievers | Brett L. Perry P: 214-272-0070
E: sheltonir@sheltongroup.com
Quantum (NASDAQ:QMCO)
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From Jan 2025 to Feb 2025
Quantum (NASDAQ:QMCO)
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From Feb 2024 to Feb 2025
