Quantum: Fiscal 2Q12 Financial Results

Quantum Corp. reported results for the second quarter of fiscal 2012, ended Sept. 30, 2011.

Revenue for the quarter totaled $165 million, down 2 percent from the second quarter of fiscal 2011 primarily due to expected reductions in media royalties and OEM revenue.

Total revenue was up $12 million sequentially, with record revenue of $36 million from disk system and software sales, including related maintenance, which increased 17 percent from FQ2’11 and 30 percent over the prior quarter.

Quantum branded revenue, which represented 82 percent of total non-royalty revenue for the quarter, grew 4 percent year-over-year and 11 percent sequentially.

For FQ2’12, GAAP net income was $4 million, or 1 cent per diluted share, compared to GAAP net income of $3 million, or 1 cent per diluted share, in FQ2’11. Non-GAAP net income for the quarter was $14 million, or 6 cents per diluted share, up from $13 million, or 6 cents per diluted share, in the comparable quarter last year.

"This was our eighth consecutive quarter of year-over-year branded revenue growth and one in which we generated our highest level of disk and software revenue to date," said Jon Gacek, president and CEO of Quantum. "We had strong customer traction with our new DXi and StorNext appliance introductions, as particularly reflected by the revenue generated from our launch of the DXi6701/02 disk backup and deduplication products, which was the most successful branded systems product launch in Quantum’s history."

He added: "We also grew branded tape automation revenue 5 percent on a year-over-year basis, partly driven by adding 135 new enterprise and midrange customers. In addition, during the quarter we launched the vmPRO 4000, the first virtual data protection offering resulting from our June acquisition of Pancetera Software. All of this speaks to the momentum and opportunity we see as we continue to leverage our proven expertise in data protection and big data management to aggressively introduce new intelligent solutions with unmatched value for meeting customers’ storage challenges."

Beyond driving revenue growth across a number of key areas in FQ2’12, Quantum also paid down $30 million of its senior debt. The company ended the quarter with $69 million of senior debt, $135 million of convertible debt and $49 million in cash and cash equivalents. Reflecting the continued improvements in Quantum’s balance sheet, Standard & Poor’s Rating Services upgraded its outlook on the company from stable to positive during the quarter.

For the third quarter of fiscal 2012,
the company expects:

• Revenue of approximately $170 million.
• A GAAP gross margin rate and non-GAAP gross margin rate similar to that in FQ2’12.
• GAAP operating expenses of $67 million and non-GAAP operating expenses of $61 million.
• Interest expense of approximately $3 million and taxes of $1 million.

Business highlights for the September quarter
include the following:

Customers responded positively to the introduction of the DXi6701/02 appliances, which began shipping in late July. Based on Quantum’s latest generation DXi 2.0 software, these products deliver performance, price-performance and value – twice the performance for half the price of the nearest competitive offering, with all necessary software licenses included in the base price. The DXi6701/02 also offers scalability and unique options for where deduplication takes place in the network.

Quantum prepared for the launch of its DXi4601 appliance, which was announced shortly after the quarter finished. Designed for small data centers or remote offices, the DXi4601 provides the industry’s first capacity-on-demand capability in a deduplication appliance and achieves twice the performance of competitors in its class at half the price. The first customer to purchase a DXi4601 was the Royal Academy of Arts in London. On the advice of Coolspirit, a Quantum reseller, this renowned institution evaluated the DXi4601 and was impressed by its "ease of use, simplicity of installation and overall value, including the ability to scale seamlessly as our capacity needs increase," according to Brenda Hillary, IT systems manager at the Royal Academy of Arts.

Moving to integrate Pancetera technology into its product portfolio, Quantum announced the vmPRO 4000, an integrated solution that includes both backup software and deduplication for protecting data on virtual servers in small to medium-size businesses and remote offices. The vmPRO 4000 combines simplicity, advanced technology and market-leading value.

Following the vmPRO 4000 announcement, Quantum finalized preparations for last week’s introduction of the vmPRO 4601 appliance and vmPRO software. The vmPRO 4601 doubles the capacity initially available in the vmPRO 4000 line and adds capacity-on-demand scalability and support for vSphere 5, the most recent version of VMware’s offering. The vmPRO software is a solution with utilities designed to dramatically improve and simplify virtual data protection in midrange and larger data centers. The software works with Quantum’s DXi deduplication appliances to accelerate backup, restore, and disaster recovery protection in data center virtual environments while reducing IT costs.

After launching its first StorNext appliance, the StorNext M330, in June, Quantum announced additions to its StorNext appliance family in September. This included new purpose-built configurations of expansion appliances and disk offerings as well as archive enabled libraries. The company’s move to offer more than just StorNext software is intended to simplify big data file sharing and archiving while delivering unparalleled data management performance, flexibility and cost-effectiveness for shared, scale-out environments.