Quantum: Fiscal 4Q13 Financial Results

Quantum Corp. reported results for fiscal 2013 (FY13) and the fourth quarter (FQ4’13), ended March 31, 2013.

Revenue for the year totaled $588 million, down 10% from fiscal 2012 (FY12), primarily due to decreased market demand for tape products. Quantum reported record revenue of $152 million from disk systems and software sales (including related service), an 11% increase over FY12 driven by record revenue from both StorNext and midrange DXi sales. For FQ4’13, Quantum reported $140 million in revenue, a 13% decline from the same period last year (FQ4’12), also primarily due to lower demand for tape.

Disk systems and software revenue (including related service) grew for the seventh consecutive quarter on a year-over-year basis.

Quantum reported a GAAP net loss for FY13 of $52 million, or 22 cents per diluted share, compared to $9 million in the prior year. On a non-GAAP basis, Quantum had a net loss of $14 million for the year, or 6 cents per diluted share, down from $30 million of net income in FY12. For FQ4’13, Quantum had a GAAP net loss of $15 million, or 6 cents per diluted share, compared to a net loss of $11 million in the same quarter last year. Non-GAAP net loss for FQ4’13 was $5 million, or 2 cents per diluted share, down from $1 million of net income a year earlier. The year-over-year declines were largely due to the lower tape product and royalty revenue.

"Although this was a challenging year for storage generally, and a particularly tough one for tape, we grew our disk systems and software revenue to a new high, maintained our market share leadership in tape, introduced a broad range of innovative new products and further improved our balance sheet," said Jon Gacek, president and CEO of Quantum. "We will build on this progress in the new fiscal year to drive a balance of growth and profit, and we are well-positioned to do so.

"Our product portfolio is a key strength, and we will continue to be aggressive about utilizing our technology assets to create products and solutions that are clearly differentiated and deliver superior value to customers in both data protection and big data management. This will include new deduplication, virtualization, cloud, workflow and archive offerings."

Quantum generated $16 million in cash from operations in FQ4’13 and ended FY13 with $72 million in total cash and cash equivalents.

For full FY14, Quantum expects:

• Total revenue of $610 million to $630 million.
• GAAP and non-GAAP gross margin rates in the mid-40% range.
• GAAP and non-GAAP operating expenses of $265 million to $270 million and $245 million to $250 million, respectively.
• Interest expense of $10 million and taxes of $2 million.
• GAAP loss per share of 5 cents to breakeven and non-GAAP earnings per share of 5 cents to 10 cents.

For FQ1’14, the company expects:

• Total revenue of $135 million to $140 million.
• GAAP gross margin rate of 41 to 42% and non-GAAP gross margin rate of 42 to 43%.
• GAAP and non-GAAP operating expenses of $65 million to $67 million and $60 million to $62 million, respectively.
• Interest expense of $2.5 million and taxes of $500,000.

Key business highlights for the March quarter include:

• Quantum announced the DXi6800 backup and deduplication appliance, which combines performance, scalability and efficiency with pay-as-you-grow extensibility to deliver better overall value than the market leader. The new appliance provides up to 16TB/hour performance, 13-156TB of usable capacity in a single system and a small footprint per terabyte. It can replicate to Quantum Q-Cloud, enabling cloud-based data protection and DR, and also integrates with Symantec NetBackup AIR, reducing the time needed to return to business in the event of a disaster.
• The company introduced its Scalar i6000 HD enterprise tape library, offering best-in-class slot density and scalability as well as performance and availability. Designed to address customers’ big data and archive needs with slot densities that are twice those offered by competitors, the Scalar i6000 HD makes nearly 5PB of data available in a single 19" rack and scales to more than 75PB of capacity. It also incorporates new HA and management features, including active-active dual robotics for fast data access times.
• The StorNext M440 Metadata Appliance began its first full quarter of availability. It enables central control of up to 500 million files for management of large-scale, fast-growing datasets, including petabytes of tiered content archives. Quantum also started early shipments of its StorNext QX Storage, primary disk storage optimized for StorNext collaborative workflow environments. Both appliances are compatible with the large installed base of Apple Xsan solutions and made for mid-sized creative workflow environments.
• DXi6800 won the Initiative Mittelstand Innovation IT Award 2013 at the CeBIT trade show, and the DXi6701/02 took top honors as the Network Computing 2013 Product of the Year Award in the storage product category. In addition, Turner Studios’ Sports Central received a 2012 Excellence Award from Broadcast Engineering magazine for a solution it created to streamline and centralize the video ingest, management and multi-screen distribution of its sports content. Turner uses Quantum’s StorNext File System and StorNext Storage Manager software to manage the high-performance sharing, accessing and archiving of content within the system.