QUANTUM CORP /DE/ Q1 FY2025 earnings call

• Reached an agreement with lenders to increase liquidity by over $25 million, restructuring existing debt to improve capital structure and operational flexibility.
• Quantum's Myriad and ActiveScale platforms are positioned to address unstructured data workflows driven by AI. Engineering team is on track with Myriad roadmap. DXi T10 had closed deals post-launch. ActiveScale had notable wins like an NBA team engagement.
• Committed to cost and discretionary spending controls during business transformation, focusing on end-to-end, higher margin subscription-based solutions.

Revenue for the first quarter of fiscal 2025 was $71.3 million, a 23% year-over-year decrease. Non-GAAP gross margin was 36.9% and adjusted EBITDA was negative $3.1 million. Total annual recurring revenue (ARR) for the trailing 12 months was approximately 49% of total revenue at $141 million, with a gross margin on the combined business of ~65%. Subscription ARR in Q1 2025 increased ~29% year-over-year and ~5% sequentially to $18.8 million, with over 92% of new unit sales being subscription-based.

• Q2 2025 revenue expected to be approximately $73 million plus or minus $2 million.
• Non-GAAP operating expenses anticipated to be ~$30 million plus or minus $2 million.
• Non-GAAP adjusted net loss per share expected to be a negative $0.06 plus or minus $0.02.
• Adjusted EBITDA expected to be breakeven, driven by anticipated gross margin improvement to the low 40% and operational expenses aligning with Q1 levels.

• Supply constraints that prevented shipping higher volumes of higher margin products, impacting margin and profitability.
• Dilution related to new warrants, approximately 7% on a fully diluted basis.
• Dependence on successful execution of strategic initiatives, business transformation, and market adoption of Myriad and ActiveScale platforms.

Q: What's the narrative behind subscription bookings being down from $4.5 million to $3.2 million year-over-year?

A: Ken Gianella said it was mainly due to supply chain delays, with anticipation of higher shipments but delays in getting elements out there.

Q: Why did service gross margin decrease 600 basis points Q-over-Q and year-over-year?

A: Ken Gianella explained it was due to operational inefficiencies in regions like North America and Europe, working to improve operational efficiencies there.

Q: Comment on Q-o-Q bookings trend for Myriad and ActiveScale?

A: Jamie Lerner said ActiveScale is doing well due to ease of install and use, and integration with tape; Myriad is in earlier growth curve with strong trial conversions but needs more training for broader sales force and partner community on its new architecture.

Q: Thoughts on fiscal year 2025 guide and stepping away from previous guidance?

A: Ken Gianella stated traditionally they don't reiterate guidance given at the start of the year, and back half of the year is weighted for improvement, with investments in the back half expected to drive profitability up to previous targets.

Q: Progress on $16 million operational efficiencies?

A: Ken Gianella said they are on track to have the efficiencies fully in hand by end of calendar year; Jamie Lerner noted OpEx decreased from over $35 million in prior quarter to $30.8 million in Q1, showing progress towards lower OpEx.