Quantum Reports Fiscal Third Quarter 2025 Financial Results
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 ...
Execution on Business Transformation Drives Significant Year-Over-Year Improvements
Takes Initial Step on Path Toward Becoming Debt-Free
SAN JOSE, Calif.: 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 |
|
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