Quantum reported a sharp increase in fiscal second-quarter revenue and a second consecutive quarter of non-GAAP profitability, while still posting a GAAP net loss. The data-storage company said stronger demand lifted its backlog to a record level, though supply constraints continue to delay some shipments.
For the quarter ended Sept. 30, revenue rose 42.9% from a year earlier to $89.6 million and increased 11% sequentially. Quantum also cited major orders for its tape and cold-storage products.
Key details
- Margins improved: Gross profit was $36.7 million, equal to 41.0% of revenue, up from 37.6% a year earlier and 39.3% in the preceding quarter. The year-over-year increase was 340 basis points.
- GAAP loss included a large noncash warrant adjustment: Quantum reported a net loss of $44.8 million, or $1.14 per share, compared with a $46.5 million loss, or $3.49 per share, a year earlier. The latest quarter included a $51.6 million noncash charge related to changes in the fair value of warrant liabilities.
- Adjusted results were profitable: Non-GAAP adjusted net income was $9.8 million, or $0.25 per share. Adjusted EBITDA was $11.1 million.
- Operating costs: GAAP operating expenses were $29.9 million, down from $31.7 million a year earlier. Non-GAAP operating expenses were $26.9 million, compared with $24.8 million.
- Backlog and orders grew: Quantum ended the quarter with a record backlog of nearly $100 million. It secured a major hyperscale deployment order for its Scalar i7 Raptor tape library after a multi-year customer evaluation, and booked the largest ActiveScale Cold Storage order in its history. The company said the number of core transactions above $500,000 nearly doubled.
- Tape demand was particularly strong: Hyperscale demand for tape increased more than 2.6 times year over year. Quantum said customers are using tape as part of their response to growing data-storage needs, including those associated with AI.
- Supply remains a constraint: The company said supply limitations are affecting shipment timing in some areas. It has improved its ability to secure disk drives and is fulfilling orders that had been delayed, but demand remains ahead of available supply.
- New data-management offering: Quantum recently introduced Autonomous Data Management, which it says works with its ActiveScale and tape products to help customers decide where to place data based on its value, risk and cost.
Quantum’s CEO said the quarter marked its fourth consecutive period of sequential revenue growth. The results show higher sales and gross margins alongside positive adjusted earnings, while the GAAP result was weighed down by a substantial noncash warrant valuation charge. The record backlog and large orders point to strong demand, but the company’s comments indicate that supply availability is still affecting when some sales can be shipped.