Quantum: Fiscal 3Q14 Financial Results
Sales up 11% sequentially, down 8% yearly
|(in US$ million)
||9 mo. 13
||9 mo. 14
|Net income (loss)
Quantum Corp. reported results for the third quarter of fiscal
2014, ended Dec. 31, 2013.
- Total revenue of $146 million, up 11% sequentially
- Sequential increase in branded tape automation and DXi
revenue of 37% and 32%, respectively
- 20% year-over-year growth in StorNext and related service
revenue, driven by near doubling of North America sales
- Year-over-year improvement in GAAP and non-GAAP net
income of 70% and 27%, respectively, on 8% revenue decline
Revenue for the quarter was $145.9 million, down 8% from the
third quarter of fiscal 2013, primarily due to lower tape automation revenue and
a decline in DXi sales from the record DXi quarter a year earlier.
On a sequential basis, total revenue was up 11% and, as
previously announced, above the high end of the guidance range provided in the
company's Oct. 23, 2013 earnings announcement.
Product highlights included growth in StorNext and related
service revenue of 20% year-over-year and 5% over the prior quarter, as well as
sequential increases in branded Scalar tape automation and DXi sales of 37% and
32 percent, respectively.
On a GAAP basis, Quantum reported breakeven operating income
for the quarter, better than the $5.7 million operating loss a year earlier, and
had a net loss of $2.4 million, or $0.01 per diluted share, compared to a net
loss of $8.2 million in the prior year, a 70% improvement. On a non-GAAP basis,
the company generated $8.6 million of operating income, up $1.2 million
year-over-year. Finally, it reported non-GAAP net income of $6.2 million, or
$0.02 per diluted share, approximately $1.3 million, or 27 percent, higher than
a year earlier. The operating and net income results were better than the high
end of the third quarter guidance given in October.
"Our December quarter results
reflect our focus on driving increased profitability and cash flow while
capitalizing on revenue opportunities," said Jon Gacek, president and CEO,
Quantum. "We reduced our GAAP operating expenses by 17% year-over-year - and 12%
on a non-GAAP basis - improving our bottom-line results and helping us end the
quarter with our highest cash balance in three years. At the same time we
continued to increase our StorNext revenue, with particularly strong
year-over-year growth driven by a near doubling of sales in North America, and
improved our DXi and tape automation revenue performance over the prior quarter.
Moving forward, we will maintain a balanced approach between growth and profit,
building on our expanding product portfolio and market reach and the actions
we've taken to reduce our cost structure."
Quantum generated $7.3 million in cash
from operations in the quarter, ending the quarter with
$82.8 million in total cash and cash equivalents.
For the fourth quarter of fiscal 2014, Quantum
- Revenue of approximately $125 million to $130
- GAAP gross margin of 42 to 43% and non-GAAP gross margin
of 43 to 44 percent.
- GAAP operating expenses of $60 million to $61 million and
non-GAAP operating expenses of $55 million to $56 million.
- Interest expense of $2.5 million and taxes of $500,000.
The company noted that its fourth quarter operating expense
guidance is $10 million to $11 million lower than actual operating expenses on a
GAAP basis in the comparable quarter a year ago and $7 million to $8 million
lower on a non-GAAP basis. Quantum also reiterated that it expects approximately
$16 million to $18 million of additional annual expense savings from the
outsourcing of manufacturing operations and staffing reductions announced
earlier this month to be reflected in the company's results beginning in the
fiscal first quarter of 2015 (June 2014 quarter).
Business highlights for the
December quarter include:
Based on the integration of the company's Lattus Object
Storage with Rocket Arkivio data archiving software,it announced a new solution
to reduce primary storage and backup costs by archiving static, unstructured
data. Customers using the combined solution can save 30% or more in annual
storage expenses and, in many cases, pay back their investment within a year.
The company introduced a new program enabling MSPs and VARs
to expand their businesses with a cloud backup service powered by DXi virtual
deduplication appliances and vmPRO backup software. Through capacity-based
subscription pricing, the program allows MSPs and VARs to brand, market and sell
cloud backup-as-a-service offerings that scale as their revenues grow, thereby
reducing the need for large up-front capital expenditures on hardware.
The company and its Lattus Object
Storage solution were named as finalists for 2014 Storage Visions Awards, which
honor excellence and innovation in media and entertainment technology. The
solution also received honorable mention in the Tiered Storage Product of the
Year category at the 2013 Storage Virtualization Cloud Awards. At these same
awards, the Quantum Alliance reseller program was also selected as Vendor's
Reseller Channel Program of the Year.