Quantum: Fiscal 4Q14 Financial Results

Quantum Corp. reported results for the fiscal fourth quarter and full year 2014 ended March 31, 2014.

Fiscal Fourth Quarter 2014 Results
(All comparisons are relative to the fiscal fourth quarter 2013)

• Revenue was $128.0 million, within the January guidance range but down 9%, primarily due to lower tape automation and DXi sales.
• Scale-out storage (StorNext and Lattus) revenue grew 9%, driven by a nearly 50% increase in North America sales.
• GAAP operating loss was $12.5 million, a slight improvement from a $12.9 million operating loss.
• GAAP net loss was $14.4 million, or $0.06 per diluted share, compared to a net loss of $15.2 million, or $0.06 per diluted share.
• Non-GAAP operating loss was $159,000 – reduced from an operating loss of $3.7 million.
• Non-GAAP net loss was $2.1 million, an improvement of 65% compared to a net loss of $6.0 million.
• Cash generated from operations was $20 million.

Fiscal Year 2014 Results
(All comparisons are relative to the fiscal year 2013)

• Revenue was $553.2 million, down 6%, due primarily to lower tape automation and DXi sales.
• Scale-out storage revenue reached a record level, growing 12% overall and approximately 50% in North America.
• GAAP net loss was $21.5 million, an improvement of approximately 60% from a net loss of $52.2 million.
• Non-GAAP net income was $13.7 million, up $27.2 million.
• Cash generated from operations was $35.5 million, compared to $7.7 million.
• Quantum ended the fiscal year with $101.9 million in total cash and cash equivalents, the highest level in four years.

“We’re very pleased with our progress over the past year – financially, operationally and strategically,” said Jon Gacek, president and CEO, Quantum. “We reduced our cost structure and achieved our goal of improving bottom line results and increasing cash flow. We also took a number of actions that successfully drove greater operational and sales effectiveness, including aligning our engineering and product groups to better leverage cross-company strengths and refining our sales model to create greater focus in both key verticals and the broader storage market. Lastly, we enhanced our strategic position and value to customers, introducing a range of new offerings, including: our StorNext 5 platform and related appliances for high-performance, scale-out content storage and collaboration; DXi deduplication and vmPRO backup software products for virtual environments; and a Lattus object storage solution data center customers can deploy as a highly scalable, self-healing and self-protecting nearline disk tier – onsite or as the foundation for a private cloud.

“In this new fiscal year, we will build on our progress through several strategic initiatives that leverage our technology, product and install base strengths and capitalize on the market trends in data protection and scale-out storage – with the goal of delivering profitable growth in our core business and increased shareholder value.”

For the fiscal first quarter of 2015, Quantum expects:

• Revenue of approximately $125 million to $130 million.
• GAAP gross margin of 43.3 to 44.3% and non-GAAP gross margin of 44 to 45%.
• GAAP operating expenses of approximately $59 million and non-GAAP operating expenses of approximately $54 million.
• Interest expense of $2.5 million and taxes of $500,000.

For the full fiscal year 2015, Quantum expects:

• Revenue of approximately $540 million to $550 million.
• GAAP gross margin of 44.6 to 45.6% and non-GAAP gross margin of 45 to 46%.
• GAAP operating expenses of $227 million to $232 million and non-GAAP operating expenses of $215 million to $220 million.
• Interest expense of $10 million and taxes of $2 million.

Fiscal Fourth Quarter 2014 Business Highlights

• Quantum announced several new products based on its StorNext 5 platform. These include StorNext Pro Solutions which are specifically designed and optimized to meet today’s toughest workflow challenges, thereby enabling greater levels of efficiency for broadcasters and post-production facilities. The initial three Pro Solutions offerings provide high-performance storage for refreshing or enhancing older Apple Xsan environments, meeting new 4K workflow demands and supporting end-to-end content production and library management.
• Extending its technology leadership in disk-based backup and deduplication, the company launched the DXi4700 appliance. It provides scalability (5-135TB of usable capacity), density and cost per terabyte under a pay-as-you-grow model, along with security, performance and value features that make it a particularly good fit in the data center, hosted environments and remote sites.
• Quantum continued to see increasing market traction in selling StorNext to its data center customers for video storage streamlining. The company turned several small tape library opportunities into $200,000 plus deals incorporating StorNext – including at one of the largest athletic shoe companies in the world, which needed a better storage solution for all its marketing videos.
• Quantum had four products named as finalists in Storage magazine/SearchStorage.com‘s 2013 Product of the Year Awards, more than any other storage provider. The products – DXi6800 physical backup and deduplication systems, DXi V4000 virtual backup and deduplication appliances, Scalar i6000 HD tape libraries and Lattus Object Storage solutions – span a cross section of the company’s data protection and scale-out storage portfolios and were recognized for innovation and value.