Quantum Reports Second Quarter Fiscal 2022 Results – PRNewswire

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Revenue Increases 5% Sequentially to $93.2 Million
Guides For 12% Sequential Growth in Third Fiscal Quarter
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Nov 03, 2021, 16:05 ET
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SAN JOSE, Calif., Nov. 3, 2021 /PRNewswire/ — Quantum Corporation (NASDAQ: QMCO) announced today financial results for its fiscal second quarter ended September 30, 2021.
Second Quarter Fiscal 2022 Financial Summary and Recent Highlights
Jamie Lerner, Chairman and CEO, Quantum commented, "Our second quarter results exceeded the high-end of our guidance range across all key metrics, supported by strong customer demand while increasing backlog to over $50 million. Orders from our hyperscale customers grew sequentially for the third consecutive quarter, and while not all orders will ship in the subsequent quarter, visibility into revenue contribution from this growing base has improved dramatically relative to a year ago. The ongoing industry supply constraints improved during the quarter, but still restricted our ability to meet all end customer demand. We anticipate supply chain constraints will see further improvement in our third fiscal quarter, which should allow the company to see a sequential reduction in current backlog levels.
"Also, during the quarter, software and recurring licensing revenue increased significantly, with our CatDV software delivering a second consecutive quarter of increased bookings, driven by strong adoption across sports, entertainment and enterprise markets. Our recurring software and services customer base continued to accelerate with bookings 2 times greater than customers in the quarter, demonstrating a growing backlog of higher margin recurring revenue. Additionally, the integration of Pivot3 has progressed well, and we have begun to cross-sell these video surveillance software solutions to our current customer base. Further, the recent launch of our ActiveScale Cold Storage, which combines tape architecture and storage-as-a -service software, offers hyperscale-level archive storage options for the enterprise and cloud providers, broadening the company’s available market and cross-selling opportunities."
Mr. Lerner concluded by stating, "Our team’s continued execution during these ongoing supply chain constraints has been exceptional. The underlying fundamentals of our business, as well as the overall demand environment, are the strongest they have been since I joined the company. We are building an organization that over the long-term can support significantly higher levels of revenue, while shifting to a higher mix of recurring revenue. We look forward to sharing more details about our transition to a recurring revenue model at our upcoming virtual Analyst Day on November 9th."
Second Quarter Fiscal 2022 vs. Prior Quarter
Revenue for the second quarter fiscal 2022 was $93.2 million, representing an increase of 4.6% sequentially from $89.1 million last quarter. Gross profit in the second quarter of fiscal 2022 was $38.4 million, or 41% of revenue, compared to $37.3 million, or 42% of revenue, in the prior quarter.
Total operating expenses in the second quarter of fiscal 2022 were $39.3 million, or 42% of revenue, compared to $37.3 million, or 42% of revenue, in the prior quarter. Selling, general and administrative expenses were $26.9 million in the quarter, compared to $25.8 million in the first fiscal quarter 2022. Research and development expenses were $12.4 million in the second quarter of fiscal 2022, compared to $11.3 million last quarter.
GAAP net loss in the second quarter of fiscal 2022 was $9.3 million, or ($0.16) per share, which included a debt extinguishment charge of $15 million partially offset by a gain of $10 million for the forgiveness on the PPP loan, compared to a net loss of $4.2 million, or ($0.07) per share, in the first fiscal quarter 2022. Excluding stock compensation, restructuring charges and other non-recurring costs, non-GAAP adjusted net income in the second fiscal quarter of 2022 was $0.1 million, or $0.00 per diluted share, compared to adjusted net income of $0.1 million, or $0.00 per diluted share, last quarter.
Adjusted EBITDA in the Second quarter of fiscal 2022 was $5.3 million, compared to $5.4 million in the prior quarter.
For a full reconciliation of GAAP to non-GAAP financial results and additional cautionary language about the use of non-GAAP financial measures, please see the financial reconciliation tables below.
Balance Sheet and Liquidity 
Outlook
Given the expected improvements in the supply chain for the third fiscal quarter of 2022, the company expects the following guidance range:
For fiscal year 2022, the company continues to expect to achieve the following revenue guidance range:
Conference Call and Webcast
Management will host a live conference call today, November 3, 2021, at 5:00 p.m. ET (2:00 p.m. PT) to discuss these results. The conference call will be accessible by dialing 866-424-3436 (U.S. Toll-Free) or +1-201-689-8058 (International) and entering pass code 13724393. This conference call will be broadcast live over the Internet with a slide presentation and can be accessed by all interested parties on the investor relations section of the Company’s website at http://investors.quantum.com under the events and presentations tab.
A telephone replay of the conference call will be available approximately two hours after the conference call and will be available through November 10, 2021. To access the replay dial 1-877-660-6853 and enter the pass code 13724393 at the prompt. International callers should dial +1-201-612-7415 and enter the same passcode. Following the conclusion of the live call, a replay of the webcast will be available on the Company’s website for at least 90 days.
About Quantum
Quantum technology, software, and services provide the solutions that today’s organizations need to make video and other unstructured data smarter – so their data works for them and not the other way around. With over 40 years of innovation, Quantum’s end-to-end platform is uniquely equipped to orchestrate, protect, and enrich data across its lifecycle, providing enhanced intelligence and actionable insights. Leading organizations in cloud services, entertainment, government, research, education, transportation, and enterprise IT trust Quantum to bring their data to life, because data makes life better, safer, and smarter. Quantum is listed on Nasdaq (QMCO) and the Russell 2000® Index. For more information visit www.quantum.com.
Quantum and the Quantum logo are registered trademarks of Quantum Corporation and its affiliates in the United States and/or other countries. All other trademarks are the property of their respective owners.
Forward-Looking Information
The information provided in this press release may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 ("Exchange Act"). These forward-looking statements are largely based on our current expectations and projections about future events and financial trends affecting our business. Such forward-looking statements include, in particular, statements related to future projections of our financial results; that our newly introduced products will drive a growing contribution of recurring revenue and deliver higher margins, while also increasing the total addressable market of our solutions; our expectations to continue our operational execution and to gain incremental traction across our market verticals, including with our leading hyperscale and global web scale customers, statements about our backlog and the implication that this backlog will translate into future revenue; the trend in our underlying business remaining robust; continued progress in our business transformation; the anticipated impact and benefits of our acquisition of Pivot3’s video surveillance portfolio and assets; the anticipated impact and benefits of the refinancing of our outstanding debt; and the Company’s position for long-term sustainable growth and profitability.
These forward-looking statements may be identified by the use of terms and phrases such as "anticipates", "believes", "can", "could", "estimates", "expects", "forecasts", "intends", "may", "plans", "projects", "targets", "will", and similar expressions or variations of these terms and similar phrases. Additionally, statements concerning future matters and other statements regarding matters that are not historical are forward-looking statements. Investors are cautioned that these forward-looking statements relate to future events or our future performance and are subject to business, economic, and other risks and uncertainties, both known and unknown, that may cause actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements.
These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, including without limitation, the following: risks related to the need to address the many challenges facing our business; the potential impact of the COVID-19 pandemic on our business, including potential disruptions to our supply chain, employees, operations, sales and overall market conditions; the competitive pressures we face; risks associated with executing our strategy; the distribution of our products and the delivery of our services effectively; our ability to integrate the business, products, employees and other aspects of Pivot3’s video surveillance business; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; estimates and assumptions related to the cost (including any possible disruption of our business) and the anticipated benefits of the transformation and restructuring plans; the outcome of any claims and disputes; and other risks that are described herein, including but not limited to the items discussed in "Risk Factors" in our filings with the Securities and Exchange Commission, including our Form 10-K filed with the Securities and Exchange Committee on May 26, 2021 and our Form 10-Q filed on November 3, 2021. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law or regulation.
Investor Relations Contacts:
Shelton Group
Leanne K. Sievers | Jeffrey Schreiner
P: 949-224-3874 | 512-243-8976
E: [email protected]
QUANTUM CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts, unaudited)
September 30, 2021
March 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
22,757
$
27,430
Restricted cash
450
707
Accounts receivable, net of allowance for doubtful accounts of $350 and $406
63,098
73,102
Manufacturing inventories
28,848
24,467
Service parts inventories
23,564
23,421
Other current assets
11,451
6,939
Total current assets
150,168
156,066
Property and equipment, net
12,295
10,051
Intangible assets, net
9,132
5,037
Goodwill
10,262
3,466
Restricted cash

5,000
Right-of-use assets, net
7,917
9,383
Other long-term assets
8,684
5,921
Total assets
$
198,458
$
194,924
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable
$
36,991
$
35,245
Deferred revenue
78,105
84,027
Accrued restructuring charges
20
580
Long-term debt, current portion
3,125
1,850
Accrued compensation
15,435
19,214
Other accrued liabilities
18,750
18,174
Total current liabilities
152,426
159,090
Deferred revenue
40,766
36,126
Long-term debt, net of current portion
101,368
90,890
Operating lease liabilities
6,818
8,005
Other long-term liabilities
13,073
13,058
Total liabilities
314,451
307,169
Stockholders’ deficit
Preferred stock, 20,000 shares authorized; no shares issued and outstanding


Common stock, $0.01 par value; 125,000 shares authorized; 59,272 and 56,915 shares issued and outstanding
593
570
Additional paid-in capital
636,538
626,664
Accumulated deficit
(752,029)
(738,623)
Accumulated other comprehensive loss
(1,095)
(856)
Total stockholders’ deficit
(115,993)
(112,245)
Total liabilities and stockholders’ deficit
$
198,458
$
194,924
QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts, unaudited)
Three Months Ended September 30,
Six Months Ended September 30,
2021
2020
2021
2020
Revenue:
   Product
$
54,655
$
50,850
$
106,786
$
90,537
   Service
34,359
31,494
67,189
61,880
   Royalty
4,166
3,477
8,303
6,709
      Total revenue
93,180
85,821
182,278
159,126
Cost of revenue:
   Product
41,124
34,998
79,864
65,380
   Service
13,669
12,089
26,748
24,160
      Total cost of revenue
54,793
47,087
106,612
89,540
Gross profit
38,387
38,734
75,666
69,586
Operating expenses:
   Research and development
12,389
10,233
23,680
20,395
   Sales and marketing
15,462
13,153
29,414
24,723
   General and administrative
11,466
10,263
23,293
21,825
   Restructuring charges
8
1,585
274
2,637
      Total operating expenses
39,325
35,234
76,661
69,580
Income (loss) from operations
(938)
3,500
(995)
6
Other income (expense), net
126
(312)
(71)
(697)
Interest expense
(3,070)
(7,578)
(6,956)
(14,015)
Net loss before income taxes
(8,842)
(4,390)
(12,982)
(14,706)
Income tax provision
411
202
424
622
Net loss
$
(9,253)
$
(4,592)
$
(13,406)
$
(15,328)
Net loss per share – basic and diluted
$
(0.16)
$
(0.11)
$
(0.23)
$
(0.38)
Weighted average shares – basic and diluted
58,567
40,286
57,852
40,097
QUANTUM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Six Months Ended September 30,
2021
2020
Operating activities
Net loss
$
(13,406)
$
(15,328)
  Adjustments to reconcile net loss to net cash provided by (used in) operating activities  
Depreciation and amortization
3,967
2,580
Amortization of debt issuance costs
1,629
3,015
Long-term debt related costs

167
Provision for product and service inventories
2,418
3,588
Stock-based compensation
6,273
4,550
Paycheck Protection Program loan forgiveness
(10,000)

Non-cash loss on debt extinguishment
8,471

Other
(20)
1,268
Changes in assets and liabilities:
Accounts receivable, net
10,024
7,568
Manufacturing inventories
(5,199)
(8,858)
Service parts inventories
(1,818)
(4,333)
Accounts payable
1,559
1,601
Accrued restructuring charges
(560)
240
Accrued compensation
(3,779)
2,922
Deferred revenue
(9,032)
(12,584)
Other assets and liabilities
(5,789)
(5,693)
Net cash used in operating activities
(15,262)
(19,297)
Investing activities
Purchases of property and equipment
(2,396)
(1,434)
Business acquisition, net of cash acquired
(5,000)

Net cash used in investing activities
(7,396)
(1,434)
Financing activities
Borrowings of long-term debt, net of debt issuance costs
94,961
19,400
Repayments of long-term debt
(93,051)

Borrowings of credit facility
126,084
140,987
Repayments of credit facility
(116,084)
(144,058)
Borrowings of payment protection program

10,000
Proceeds from issuance of common stock
806
537
Net cash provided by financing activities
12,716
26,866
Effect of exchange rate changes on cash, cash equivalents and restricted cash
12
(96)
Net change in cash, cash equivalents and restricted cash   
(9,930)
6,039
Cash, cash equivalents, and restricted cash at beginning of period
33,137
12,270
Cash, cash equivalents, and restricted cash at end of period
$
23,207
$
18,309
Cash, Cash Equivalents and Restricted Cash at end of period
Cash and cash equivalents
$
22,757
$
12,517
Restricted cash, current
450
792
Restricted cash, long-term

5,000
Cash, cash equivalents and restricted cash at the end of period
$
23,207
$
18,309
NON-U.S. GAAP FINANCIAL MEASURES
To provide investors with additional information regarding our financial results, we have presented Adjusted EBITDA and Adjusted Net Income (Loss), non-U.S. GAAP financial measures defined below.
Adjusted EBITDA is a non-U.S. GAAP financial measure defined by us as net loss before interest expense, net, provision for income taxes, depreciation and amortization expense, stock-based compensation expense, restructuring charges, and other non-recurring expenses.
Adjusted Net Income (Loss) is a non-U.S. GAAP financial measure defined by us as net loss before restructuring charges, stock-based compensation expense, and other non-recurring (income) expenses. The Company calculates Adjusted Net Income (Loss) per Basic and Diluted share using the Company’s above-referenced definition of Adjusted Net Income (Loss).
We have provided below a reconciliation of Adjusted EBITDA and Adjusted Net Income (Loss) to Net Income (Loss), the most directly comparable U.S. GAAP financial measure. We have presented Adjusted EBITDA because it is a key measure used by our management and the board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short and long-term operating plans. In particular, we believe that the exclusion of the amounts eliminated in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business performance. We believe Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Basic and Diluted Share serve as appropriate measures to be used in evaluating the performance of our business and help our investors better compare our operating performance over multiple periods. Accordingly, we believe that Adjusted EBITDA and Adjusted Net Income (Loss) provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and our board of directors.
Our use of Adjusted EBITDA and Adjusted Net Income (Loss) have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are as follows:
Other companies, including companies in our industry, may calculate Adjusted EBITDA, Adjusted Net Income (Loss) or similarly titled measures differently, which reduces its usefulness as a comparative measure.
Because of these and other limitations, you should consider Adjusted EBITDA and Adjusted Net Income (Loss) along with other U.S. GAAP-based financial performance measures, including various cash flow metrics and our U.S. GAAP financial results.
The following is a reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, Net Income (Loss) (dollars in thousands):
Three Months Ended September 30,
Six Months Ended September 30,
2021
2020
2021
2020
Net loss
$
(9,253)
$
(4,592)
$
(13,406)
$
(15,328)
Interest expense, net
3,070
7,578
6,956
14,015
Provision for income taxes
411
202
424
622
Depreciation and amortization expense
1,688
1,295
3,031
2,580
Stock-based compensation expense
3,072
2,591
6,273
4,549
Restructuring charges
8
1,585
274
2,637
Loss on extinguishment of Senior Secured Term Loan
14,960

14,960

Gain on PPP loan forgiveness
(10,000)

(10,000)

Amortization of acquisition related intangible assets
471

936

Acquisition-related costs
811

950

Long-term debt related costs
45
203
252
1,169
Adjusted EBITDA
$
5,283
$
8,862
$
10,650
$
10,244
The following is a reconciliation of Adjusted Net Income to the most comparable U.S. GAAP financial measure, Net Income (Loss) (in thousands):
Three Months Ended September 30,
Six Months Ended September 30,
2021
2020
2021
2020
Net loss
$
(9,253)
$
(4,592)
$
(13,406)
$
(15,328)
Stock-based compensation
3,072
2,591
6,273
4,549
Restructuring charges
8
1,585
274
2,637
Loss on extinguishment of Senior Secured Term Loan
14,960

14,960

Gain on PPP loan forgiveness
(10,000)
(10,000)
Amortization of acquisition related intangible assets
471

936

Acquisition-related costs
811

950

Long-term debt related costs
45
203
252
1,169
   Adjusted net income (loss)
$
114
$
(213)
$
239
$
(6,973)
   Adjusted Net Income per share:
      Basic
$
0.00
$
(0.01)
$
0.00
$
(0.17)
      Diluted
$
0.00
$
(0.01)
$
0.00
$
(0.17)
   Weighted average shares outstanding:
      Basic
58,567
40,286
57,852
40,097
      Diluted
67,762
40,286
68,167
40,097
SOURCE Quantum Corp.
https://www.quantum.com/

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