Quantum Corp ((QMCO)) has held its Q3 earnings call. Read on for the main highlights of the call.
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In the latest earnings call, Quantum Corp showcased a balanced mix of optimism and challenges. The company celebrated notable achievements in revenue growth, EBITDA improvement, and a successful shift towards a subscription model. These were complemented by strategic financial maneuvers and significant customer acquisitions. Nevertheless, the company faces hurdles, notably a substantial GAAP net loss and persistent supply chain difficulties. Efforts to curb debt and enhance operational efficiency remain at the forefront of Quantum’s agenda.
Revenue and EBITDA Growth
Quantum Corp reported a revenue of $72.6 million for Q3 2025, marking a 3% increase from the previous quarter and a 1% rise year-over-year. The company’s adjusted EBITDA showed a positive turn, reaching $4.7 million, which is a sequential improvement of $5 million and a year-over-year increase of $7.3 million.
Transition to Subscription Model
The transition to a subscription-based model has been a significant focus for Quantum, with the subscription annual recurring revenue (ARR) rising by 29% year-over-year to $21.3 million. Impressively, over 90% of new sales are now subscription-based, indicating a successful shift in the company’s business strategy.
Secondary Storage Revenue Growth
Quantum’s secondary storage revenue experienced a 15% year-over-year growth, primarily driven by the introduction of new DXi data protection appliances. This growth underscores the company’s ability to innovate and meet market demand.
Large Customer Wins
The company secured significant deals, including a multimillion-dollar agreement with a leading European retailer and a major American multinational technology manufacturer. These wins highlight Quantum’s expanding market presence and customer trust.
Strategic Financial Moves
To bolster financial stability, Quantum entered a standby equity purchase agreement with Yorkville Advisors. This move is aimed at improving liquidity and reducing the company’s debt, showcasing Quantum’s proactive financial management.
Federal Sector Growth
Quantum reported a 54% year-over-year increase in revenue from the U.S. Federal sector, marking its strongest performance since fiscal 2022. This growth indicates Quantum’s successful penetration into the federal market.
GAAP Net Loss
Despite positive growth indicators, Quantum reported a GAAP net loss of $71.4 million. This figure includes a significant non-cash charge of $61.6 million related to warrant liabilities, reflecting the financial complexity the company navigates.
Supply Chain and Manufacturing Challenges
The company continues to grapple with extended supply chain lead times and manufacturing challenges, influenced by tariffs and geopolitical issues. These factors pose ongoing risks to Quantum’s operational efficiency.
Debt Levels
Quantum’s outstanding debt stands at $143.4 million, with a net debt position of $133 million. Managing this debt remains a critical focus for the company’s financial strategy.
Forward-Looking Guidance
Looking ahead, Quantum Corp anticipates continued revenue growth, supported by a 6% reduction in non-GAAP operating expenses and strategic debt reduction efforts. The company’s ongoing transformation is bolstered by the success of new business wins and the expansion of its subscription model, which are expected to drive future growth and stability.
In conclusion, Quantum Corp’s earnings call presented a mixed yet promising outlook. The company is making significant strides in revenue and EBITDA growth and transitioning to a subscription model. Notable customer acquisitions and strategic financial decisions underscore its potential for future success. However, challenges such as a significant GAAP net loss and supply chain issues must be addressed to sustain this momentum.
