Quantum: Fiscal 1Q15 Financial Results

Quantum Corp. reported results for the fiscal first quarter 2015 ended June 30, 2014.

Fiscal First Quarter 2015 Results

• Total revenue was $128.1 million, above the midpoint of company’s May guidance range of $125 million to $130 million. Excluding a one-time $15 million royalty payment reported in the prior year period, revenue was down 4%. This decline was primarily due to lower tape automation sales, with OEM and branded automation revenues down 24% and 9%, respectively.
• Total branded revenue grew to $102.3 million.
• Scale-out storage revenue grew 41% to $18.1 million, its highest quarterly level to date, reflecting continued momentum in sales of StorNext appliances.
• GAAP operating loss was $1.5 million. Excluding the one-time royalty payment in the prior year period, GAAP operating loss was reduced by $7.8 million.
• GAAP net loss was $4.3 million, or $0.02 per diluted share. GAAP net loss improved $7.4 million, excluding the one-time royalty payment.
• Non-GAAP operating income was $5.2 million. Excluding the one-time royalty payment, this improved from a $1.1 million non-GAAP operating loss.
• Non-GAAP net income was $2.4 million, or $0.01 per diluted share. This was an improvement from a $3.6 million non-GAAP net loss, excluding the one-time royalty payment.
• Cash generated from operations was $6.3 million, and Quantum ended the quarter with $107.2 million in total cash and cash equivalents.

“Our strong first quarter results reflect the adjustments in our business model and other strategic actions we’ve taken over the past five quarters to drive shareholder value by generating increased profit and cash flow while positioning the company to deliver overall revenue growth,” said Jon Gacek, president and CEO, Quantum. “These results also demonstrate the market traction we’re seeing from our continued focus on technology and product innovation. We had strong revenue momentum at quarter end, particularly related to our scale-out storage solutions and DXi appliances, and this momentum has carried over into the current quarter.”

“To cite just one example, late last month we closed a scale-out storage deal for more than $3 million at a leading consumer electronics company with one of the most recognizable brands in the world. The customer purchased a full suite of Quantum StorNext and Lattus products that will be deployed for managing video workflows,” he added.

Fiscal Second Quarter 2015 Outlook
Revenue of approximately $130 million to $135 million.
GAAP and non-GAAP gross margin of 44% to 45%.
GAAP operating expenses of $56 million to $58 million and non-GAAP operating expenses of $53 million to $55 million.
Interest expense of $2.5 million and taxes of $500,000.

Fiscal First Quarter 2015 Business Highlights

• Quantum continued to build on its scale-out storage leadership in media and entertainment, with customer wins that included StorNext deals over $200,000 at a major studio and top international broadcaster, as well as a large follow-on Lattus sale to a multinational TV shopping network. At the same time, the company saw significant interest in its new StorNext Pro Solutions, high-performance storage systems configured to meet the requirements of post-production facilities and smaller broadcasters for refreshing aging Xsan environments, meeting new 4K workflow demands and supporting end-to-end content production and archive.
• Quantum further expanded its growing customer base in sports video, highlighted by a four-year deal with one of the world’s leading sports broadcasters to provide content and workflow management of its new production library and video archive. The company also announced a new joint solution with Telestream, providing ingest, instant review and storage of video from multi-camera, live sporting events. This offering enables sports leagues and teams to improve the viewing experience, as well as repurpose and remonetize their content – all at a fraction of the cost of large, live sports broadcast solutions.
• Beyond its growing footprint in media and entertainment, Quantum saw continued momentum in addressing customer workflow needs in other areas, as demonstrated by the $3 million scale-out storage deal referenced above. In addition, the company began partnering with FireEye on a joint solution announced this week that enables customers to more easily investigate and combat the proliferation of cyber attacks. StorNext provides the high-performance, scale-out storage repository that allows users to keep more network traffic data for forensic analysis and incident response.
• In advance of this week’s announcement regarding a new and simplified DXi-Series family powered by StorNext 5, Quantum began shipping its new DXi6900 enterprise backup and deduplication appliance on a limited availability basis. Designed to meet the increasing range of customers’ data protection workflow needs, it provides scalability and faster backups, restores and replication while easing the strain on network bandwidth and reducing overall operating expenses. In addition to preparing for the availability launch of DXi6900 in the current quarter, the company also continued to see strong traction with its new DXi4700, with nearly 60% of those purchasing a DXi4700 being new customers.