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01/10 17:16
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: positive trends in cost reduction and product backlog, but concerns about supply chain issues and declining gross margins. The Q&A highlights cautious guidance and management's focus on operational improvements. Despite restructuring benefits, uncertainties in supply chain and manufacturing persist. The lack of clear guidance and management's cautious tone suggest a balanced outlook. Given the absence of a market cap, a neutral stock price movement is predicted, considering both positive restructuring impacts and operational challenges.
Revenue $62.7 million compared to $64.3 million in the first fiscal quarter of 2026 and $71.8 million in the prior year second quarter. The decline year-over-year was due to market conditions and operational adjustments.
Backlog Over $25 million at the end of the second quarter, significantly above the historical target run rate of $8 million to $10 million, indicating strong sales traction and customer confidence.
GAAP Gross Margin 37.6%, compared to 35.3% in the prior quarter and 42.7% in the fiscal second quarter of 2025. The year-over-year decline was attributed to market conditions, but sequential improvement reflects initial operating efficiencies from restructuring.
GAAP Operating Expenses $31.7 million, compared to $35.3 million in the prior quarter and $36.2 million in the year-ago quarter. The year-over-year reduction of $5.6 million was due to realized savings from a lowered cost structure following restructuring actions.
Non-GAAP Operating Expenses $24.8 million compared to $30 million in the fiscal first quarter of 2026 and $30.4 million in the year-ago quarter. The $5.6 million reduction year-over-year reflects cost savings from restructuring.
GAAP Net Loss $46.5 million or a loss of $3.49 per share compared to a net loss of $12.2 million or a loss of $2.54 per share in the year-ago second quarter. The increase in net loss was primarily due to a noncash loss from the issuance of forbearance warrants related to debt amendments.
Non-GAAP Net Loss $7.1 million or a loss of $0.54 per share compared to a net loss of $7.4 million or a loss of $1.54 per share in the same quarter a year ago. The improvement reflects better gross margin and reduced operating expenses.
Adjusted EBITDA Positive $0.5 million compared to a positive $1.1 million in the prior year quarter. The improvement from the prior quarter was driven by restructuring initiatives that lowered the cost structure.
Cash, Cash Equivalents, and Restricted Cash Approximately $15.3 million at the end of the fiscal second quarter.
Total Outstanding Term Debt $106.1 million at quarter end, with a net debt position of approximately $90.8 million.
ActiveScale Cold Storage and Scalar i7 RAPTOR: Selected by the Library of Congress for the 100-year Archive project, showcasing its advanced capabilities in preserving digital archives.
New ActiveScale capabilities: Introduced features like ranged restore and faster access to small objects, enabling cold data to function as active query-ready datasets.
Regional performance: EMEA performed well, APAC revenue more than doubled due to a new distribution model, and the Americas outperformed other regions with improved sales coordination.
Library of Congress project: Winning this project validated Quantum's architecture and leadership in secure high-density storage.
Restructuring benefits: Achieved $5 million reduction in non-GAAP operating expenses and positive adjusted EBITDA, reflecting improved cost structure.
Debt restructuring: Converted $52 million in term debt to senior secured convertible notes, eliminating $140 million in total debt since 2020.
Leadership changes: Appointed Geoff Barrall as Chief Product Officer to align product innovation with customer needs and market opportunities.
Partnership with Entanglement: Collaborated to provide storage solutions for next-gen AI and HPC data centers, emphasizing secure and scalable infrastructure.
Revenue Decline: Revenue for the second quarter was $62.7 million, down from $64.3 million in the prior quarter and $71.8 million in the same quarter last year, indicating a downward trend that could impact financial stability.
Debt and Financial Flexibility: The company has $106.1 million in outstanding term debt and a net debt position of $90.8 million. While efforts are being made to restructure $52 million of this debt, the high debt levels and associated interest expenses ($6 million per quarter) remain a significant burden.
Gross Margin Pressure: GAAP gross margin for the second quarter was 37.6%, down from 42.7% in the same quarter last year. Although there was a slight sequential improvement, the margin remains below the 40% target, reflecting ongoing cost and pricing pressures.
Non-GAAP Loss: The company reported a non-GAAP loss of $7.1 million for the quarter, an improvement from the prior quarter but still a loss, indicating challenges in achieving profitability.
Backlog and Supply Chain Risks: The backlog increased to over $25 million, significantly above the historical target range of $8 million to $10 million. While this indicates strong sales traction, it could also signal potential supply chain or fulfillment challenges.
Restructuring Risks: The company has implemented restructuring actions to reduce costs, but these actions carry risks related to execution and potential disruptions to operations.
Regulatory and Shareholder Approval Risks: The proposed debt restructuring is subject to shareholder approval, introducing uncertainty and potential delays in achieving financial transformation.
Market Competition: The company faces competitive pressures, as evidenced by the need to differentiate its products like ActiveScale and Scalar i7 RAPTOR in a crowded market.
Economic and Currency Risks: Regional performance varies, with strong execution in EMEA and APAC but potential exposure to economic and currency fluctuations in these and other markets.
Revenue for Q3 FY2026: Expected to be approximately $67 million, plus or minus $2 million.
Non-GAAP Operating Expenses for Q3 FY2026: Expected to be approximately $25 million, plus or minus $2 million, reflecting continued benefits from cost reduction actions.
Non-GAAP Adjusted Net Loss per Share for Q3 FY2026: Anticipated to be a negative $0.51, plus or minus $0.10 per share, based on an estimated 14 million shares outstanding.
Adjusted EBITDA for Q3 FY2026: Expected to be positive $1 million, plus or minus $1 million.
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The earnings call presents a mixed picture: positive trends in cost reduction and product backlog, but concerns about supply chain issues and declining gross margins. The Q&A highlights cautious guidance and management's focus on operational improvements. Despite restructuring benefits, uncertainties in supply chain and manufacturing persist. The lack of clear guidance and management's cautious tone suggest a balanced outlook. Given the absence of a market cap, a neutral stock price movement is predicted, considering both positive restructuring impacts and operational challenges.
The earnings call reveals a decrease in revenue and gross margin, increased net loss, and negative EBITDA, signaling financial struggles. Although operating expenses decreased, this was due to nonrecurring factors. The Q&A highlights strategic focus but also notes unmet expectations for key products and unclear responses on debt details. The lack of immediate guidance and restructuring efforts indicate potential instability. Overall, the financial and strategic challenges overshadow any positives, suggesting a likely negative stock price reaction.
The earnings call shows mixed signals: while there is a slight revenue increase and improved EBITDA, the significant net loss and debt remain concerning. The Q&A reveals some uncertainty, particularly around manufacturing headwinds and the Standby Equity Purchase Agreement, which could impact investor confidence. The positive aspects, such as increased ARR and cost reduction, are balanced by the negative financials and unclear guidance, leading to a neutral outlook.
The earnings call indicates several negative factors: a 7% revenue decline, ongoing supply chain issues, competitive pressures, and a significant net debt position. Despite cost controls and some positive developments in subscription ARR and product pipelines, these concerns, coupled with no shareholder return plan and reduced gross margins, outweigh the positives. The Q&A highlighted persistent operational headwinds and unclear management responses, further contributing to a negative sentiment. The guidance provided was not strong enough to offset these issues, leading to a prediction of a negative stock price reaction.
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