Qualstar: Fiscal 3Q19 Financial Results

(in $ million)	3Q18	3Q19	9 mo. 18	9 mo. 19
Revenue	3.1	3.7	9.3	10.0
*Growth*		17%		7%
Net income (loss)	0.4	0.0	1.5	0.2

Qualstar Corporation announced its financial results for the 3 and 9 months ended September 30, 2019.

(All amounts are in thousands, except per share data)

Results for 3Q19 vs. 3Q18

Net revenue increased 17.4% to $3,703 from $3,154
Total operating expenses increased 8.1% to $917 from $848
Net Income of $49 or $0.03 per basic and diluted share vs. net income of $405 or $0.20 per basic and diluted share

Results for 9 Months Ended September 30, 2019 vs. 2018

Net revenue increased 7.3% to $9,998 from $9,320
Total operating expenses decreased 3.8% to $2,533 from $2,634
Net income of $179 compared to $1,469, a decrease of 87.8%, or $0.09 per basic and diluted share vs. $0.72 per basic and $0.70 per diluted share
Cash provided by operations of $211 vs. $112

Highlights for the 3 and 9 Months Ended September 30, 2019

Strong balance sheet and no debt: cash, restricted cash and cash equivalents decreased by 10.4% to $4,371 from $4,881 as of December 31, 2018
Revenue growth in the data storage products segment has increased by 45.5% to $1,148 from $789 and by 55.1% to $3,060 from $1,973
Gross profit decreased from the same period last year by 23.9% to $954 from $1,253 and for the nine months ended September 30, 2019 by 34.7% to $2,679 from $4,103 for the same period last year. The decrease in gross profit for the nine months ended September 30, 2019 from the same period last year is primarily attributable to a one-time charge for the write-down of raw materials inventory purchased from a discontinued power supply contract manufacturer and a reduction of gross margin of 84.7% to $148 from $970 in the current phase of our optical drive assembly product development with Sony.

Under the stock repurchase program, during the 3 and 9 months ended September 30, 2019 a total of 22,458 and 115,164 shares were repurchased, respectively, and as of September 30, 2019 a total of 133,266 shares have been repurchased since the program began. The program expires December 5, 2019.

“Our data storage systems business continues to experience tremendous organic growth,” said Steven N. Bronson, CEO, and president. “We are excited about the progress of the optical drive development project.”