QMCO - Earnings call transcript Q4 2020

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Operator

Hello, everyone, and thank you for joining today's Quantum Fiscal Fourth Quarter and Year Ending March 31, 2020 Earnings Conference Call.

As a reminder, all callers are in a listen-only mode. But you will have the opportunity to ask questions following today’s prepared release.

For opening remarks and introductions, I am pleased to yield the floor to Mr. Rob Fink with FNK IR. Rob. Welcome,

Rob Fink

call Dodson. I'd today everyone and remotely are statements. Lerner; comments CFO, facts caution operator. statements. All of that Hosting the in CEO, Quantum advises could to that and call aware the are Mike be like you, reliance include statements made the may to forward-looking welcome call. Jamie some Thank forward-looking than of other during statements be looking. on Please today's Quantum's statements historical deemed Chairman forward

Quantum include, our hereof. differ without and to performance, adjusted financial as including More shares, Quantum's the about information statements share market or other cash limitation, that in to Forward-looking happened. those filings any Quantum and of Annual including, XX-K quarterly update revenue, with these any performance on on be changes development, alter information Quantum's disclaims States, the entitled law. factors already result a and accepted other future to on uncertainties and and XX-Q and service, non-GAAP Factors or or Quantum's to GAAP. this section required items, of on margin, SEC, EBITDA, flows Quantum's results, as the of or those the the filed competitive projections CFO any expenses, expected well with financial products are are may on by supplement that information. income, its risk as with and the forward-looking additional impact in to Risk prepared timing pandemic forward-looking generally this the of implied in call, except report accounting by as factors statements not forth in business. anticipated please statements as statements, from unexpected United information accordance SEC. note based adjusted providing the on new are factors as cause Form listed company These detailed actual expressly limited a risk but relating obligation All principles statements which discussing relisting company's events Also, financial risks, will uncertainties concerning has or results net set forward-looking the materially whether to, COVID-XX otherwise, Report information expected or of CEO involve risks date available information, in statements, in unknown known the

release. provided metrics find reconciliation company's the the for replay XX reported earnings provided at like Quantum's is the to all website to to to replay remind that like available call everyone in Jamie, the GAAP this You I the on With of is for the yours. on earnings at the days. reconciliation least turn can the these would release, also call table results investors.quantum.com. call in in is website I'd which company's link of website over said, that call A was Jamie. to this

Jamie Lerner

months When today's all ago, first little the we joined Thanks, a thank for XX joining And a you crisis. company call. over on Rob. in were company us I

based built with secular vision. of and released our many we hadn't XX key a first process, a delivered over delisted turnaround, been in strategy. long new national Putting software-defined in in multi-year are midst restatement environments. in the saw hyperscaler established growth from in decline exchange, place, that XXXX. To our product for leadership business strategy. like a storage transformation We StorNext a we the achieved were year on the clear year. we accomplishments company line We primary And new of a years, up block major storage over business we last for we a the and our and for in fiscal without a to was that highlight own architectural FY setting on a launched phase cloud a tape XXXX had growth. storage to we line the new contributor years, product the top major end, subsequently financial major in focus This some market We I'd which on the was position F-Series and business NVMe stabilizing or the

the growth to has in object positive. business the operating ActiveScale as segment extremely customers for was years, from and and forward. results. Digital a We been the We in area first innovate business March, in driver accretive acquisition Western almost immediately view partners storage and to many this reception from completed continue acquisition going the our our acquisition that of This

results. $XX loss, EBITDA Annual March. of income challenging net the in the year, from behind and promote business; are of nearly executive organizational recruit GM SEC delivered income $XX million adjusted completed significantly who included for in Chief and million serve we financial of now spite a positive a million narrowing top revenues operations, multiyear our promoted the these We transformation. million. moving as to part to new investigation summary, as a MacPherson James were business We in continue Mundle, that Storage. of and financial Year-over-year, Ed last Channel Regan other In Officer; Bruno as talent This the and -- GM to we adjusted improvement new as $XX.X been has financial Hald, lawsuit related Global has led Secondary Legal From restatements our Storage factors lead a of a year-over-year structure, flat improve and us. very Fiore of net been a our to Chief; transformed. Primary as faced new $XX and Quantum GM to standpoint, our over and our

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faced Our team has on. challenge this head

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for As March, for the data an code includes technologies acquired and software, key storage. late next-gen which classification, file data in management Atavium example, source we

acquisition as General helped VP of accelerate and As part acquisition, brings our Manager Fiore this Primary joined substantial experience Ed business. Storage and has of that Ed leadership, industry and to Quantum software-defined pressures we remain road to on in short-term, these and drivers. map hybrid a financial And growth the multi-cloud focused architecture. our continue we although opportunities five and expect towards StorNext

The for in for will coincidence organizations ever. than the unstructured for internal no communications. more video marketing, first is online is announced video using that data. more more have training, Many more health care learning for curriculums. colleges full communications to in video. It and Remote is will growth video world result drive video-based already all -- now This in more pandemic industries create data

of some in this expect forms NVMe investment pandemic We StorNext being and today. reality, storage are our developed all virtual spur of augmented currently will on which

are as such vast amounts and years. In analyzed, cases learning protected addition, IoT and medical many processed, unstructured machine AI devices for scientific generating research, be data must archived use that and of and

technology expansion even investments a analytics, In cameras, recent The workloads object software expanded sensing a cluster. for grow faster appliances COVID view archives. example. and analytics, ActiveScale video on in on hosting expected security video we into of hyper-converged March, a as for of video an surveillance is multiple a for including as surveillance new focused line portfolio servers, temperature announced physical analytics recording new The new surveillance is to recording markets. and second just with market result key and body for one We network storage

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system business the is market margin our to of major the is – models. third release transitioning by for architectures the StorNext calendar of This year. end file and The and expected software software-defined next expansion

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vision, the have in can team our We that way in accretive business and integrate is strategy place, we've customers and shareholders. a to and our that technologies proven leadership into quickly we

position company, as resiliency short-term emerge we financial accelerate the expect Our In leadership company goal people of and importantly, our leverage dynamic stabilize pressure head ensure we is done our work the from most and technology portfolio, of in the our markets as to closing, we've our expanded a to next strategy. and our transformation. phase we stronger into culture transform will the to although these COVID,

subside contained, positioned a structure, accomplished sports will earnings leader video-like and be focused or on and higher-margin operating video entertainment meet return. a Quantum is we've and XXXX, industry a in needs, We and fiscal cost-efficient innovator The solutions differentiated a a customers have with management at in our that power and will the least Quantum the our solutions. healthy, and as leaner data. higher-value growing today, of is lot pandemic Quantum. With rebuilt of clearly during large

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Mike Dodson

today. Thank Jamie. call Welcome who our you, to everyone joined has

echo challenges the weather to to few Jamie's our regarding progress the Quantum this pandemic. comments year, which like enabled I'd First, of has of better a COVID-XX past

the customer levels. focused, are our addition a appropriate through and to strategically provides activity we return being us normalized more structure more level see operating levels In us cost capital to at to that flexibility more until

COVID-XX. despite was devices, revenue, essentially $XXX.X Let's a flat growth a The in a in partially in offset late million driven by driven year fiscal storage first by X% primary decline legacy financial systems. offset Revenue with at from March unit XX.X%. backup a modest review slowdown due transitions and This increase use product gross renewals volumes from to storage customers the -- medium revenue the decline support increase backup of highlights. as by primarily Year-over-year, declines similar for by XXXX by was margins to lower basis year-over-year primary with reduced points full secondary the was flat performance driven combined in product in XXX to implementations. in services, expanded archive take royalty

will selling address service Our or in of $XXX.X focused profitable quarterly progress while million or $XX products, lines. rebuild year-over-year split We mix price, cost reflects commoditized we rather product sequential selling as year range total to across XX% between million XX% year-over-year was call later of to net of a weighted our revenue remain by compared largely to on nearly General million a the of costs The towards $XXX.X a to restructuring low-margin discussing wide reductions $XX metrics the reduction operating in the outlook $XX efforts avoiding We as value I eliminated $XX.X results. power $XX.X on our than administrative of in earnings We part of million of sales million all XX% revenue. decline operating of and management. a near-term of when profitability expenses reduction revenue as in key cost and well approximately in million the reduction in in operating careful across to due million quarterly or significantly gross approximately a Quantum, reduced aggressive $XX reduction. expenses over improved a the million. our in expenses expense margins our fiscal decreased and of XXXX. more restatement

of lower as related were the continue primarily processes will due of of that $X.X our to by there administrative facility expenses decrease part operating be decreases and offset in applications, were software million footprint. lower in stock-based rate. to was consolidate cost increase the activities, reductions $X.X our our and These expenses $X.X as run was restatement While streamline a we million related to physical compensation related costs financial and expense. general decreased These to due and lower ongoing we expenses million partially reductions

sales million declined due XX% was $XX and a to reduction. driven reduction and $XX.X expense of was expenses This area primarily million, marketing lower Another efficiencies. marketing, sales decline where nearly by headcount to improved

and innovate Importantly, research these demand. development investment savings continue customers' our further order lines in allow product to our meet expanding in to to

per compared or and XXXX, $X.XX $XX.X across year. share, $XX.X year $XX.X GAAP million year. to a $X.X diluted loss bottom-line per and diluted $X.X to fiscal last The the net million was development XX% net expenses compared Net or research million and both share result For million to of non-GAAP increased $X.XX to loss metrics. or and last improvements million

million to $XX.X $XX.X per $X.XX And Excluding compensation share restructuring per last or $X.XX share and million $XX.X $X.X income to year. million net million $XX.X was compared million diluted last year. charges, or stock nonrecurring compared EBITDA adjusted adjusted increased charges, to diluted

April. due million product we declined levels. revenue line in The royalty in and product volumes. by us let offset to $XX.X due million in declines of These And Service to $XXX.X performance. result additional primary primarily the decrease review the driven demand systems a million a secondary Now, by revenue partially in market $XX.X storage was secondary in a provided decline and Revenue result system experienced declines as quarter systems a guidance year early quarter the fourth XX% of for revenue. revised last we specifically, storage unit fourth down $X.X the overall storage primarily to COVID-XX More were reduced in compared quarter as with decrease in business revenue hyperscale lower late was increase million in declines slightly. sales. was revenue, in a

overhead XX, to to of there's Important Our our historical incremental level certain ActiveScale contribution XXXX. in Storage of Quantum wide margin the product fourth to margins primarily royalty of be revenue and that spread last which been fixed quarter due gross of percentage LTO-X higher-margin from Gross lagged prior to partially quarter the LTO-X, mix fourth XX.X% included has continued basis, a lower lower a a contracted $X to by note, so On of on expected the higher revenue decreased is in fourth levels, XXX relatively financials. Gross expectations adoption was has costs of to historical the our contribution margins months. anticipation basis in million closed ActiveScale to March and the reseller from the year. offset business, LTO-X revenue a sequential to six quarter to revenue. revenue customer points ActiveScale favorable quarter. for across for XX.X% periods. acquisition, included the Royalty service of a of primarily Object next be in due pricing in XX.X% the next-generation modestly, acquisition compared third compared launched The attractive

of a as driven gross last across was the As in the quarter, on points XXX call our basis towards as we quarter, which more was well profitable wide third gross of offerings. reductions lines product from prior higher margin a sales the outlined quarter nearly product by range cost mix due profit primarily primarily product weighted to increase

margins a a significant The and implied of XX% the lower-margin and of the in for in margin guidance fourth million. based The increase quarter, revenue federal high-margin business. XX% business gross $XX last third gross midpoint the financial on quarter benefit quarter, of enjoyed hyperscale a to of levels included provided range lower

$X.X expenses diluted million expenses and XX% $X.X expect a the XX% GAAP general and would quarter marketing the fourth revenue to decline million XX% were our loss expect QX. driven to overall decreased costs streamline year we per spread the million physical related and we compared and expenses marketing by fourth expenses net driven we net last a $XX.X In financial and would was $XX continue the quarter. as Therefore, as million The of $X.X gross QX a decrease quarter press to applications in GAAP XX% over by are me, ago our or software a Research total, the related programs. as in gross we well XX% was to in million of ago a marketing lower our sales $X.X decrease in The lower expenses development share were in in as income reduced in to quarter, operating up on being today's in revenue and consolidate decrease fourth our revenue per release, next year lower processes $X.X $X.XX in loss continued to restatement or expenses, overhead $XX.X $X.XX margins stay year. facility $X.X in share in or decreased and million discussed excuse in decrease in revenue or – quarter decline the driven compensation headcount, compared fourth with the midpoint an As the quarter. in pressure range million on in general outlook quarter, of and sales diluted reported and restructuring, will overall was of in $X.X footprint. in costs net fixed the base. a expenses revenue by million This million million administrative and to XX% compared in administrative expenses and expenses. decline was margins

measure a million quarter released adjusted share fourth results reconciliation and $X.X quarter share per the to $X.XX Excluding year. net income $X.XX million and $X.X in GAAP press today. the non-GAAP of or to compared ago decreased or the in diluted $X.X our charges, to loss million compensation of stock to in release EBITDA fourth full directly There's the was Form diluted compared $X.X million XX-K million the last net the per comparable both charges, adjusted year most $XX.X per non-recurring restructuring in quarter. Adjusted income

This of sheet as equivalents $XX.X March Now, were XXXX was flows. balance operations, XX, the the looking of compared summary, total capital plus In transaction. million of balance million million March million compares the of and at $X.X the unamortized XX, of adding used million cash capital changes million, the of of The price capital the $XX.X million for capital strength excludes end cash by $X costs the in changes to current and borrowings debt current for XXXX cash in better and Cash million million to of revolving in netting prior the from generated in excluding March in million fiscal debt in prior XXXX. short-term XX, the facility of mainly $X.X required nearly in cash the working on down million $XX down from interest working at by cash. fiscal Net adding before million year the requirements acquisition at XX, Included the drawn netting outstanding expenditures year, of to operating debt sum debt XXXX, than cash year $XX.X from of used The and credit prior the represents million year facility activities million $X.X and operations ActiveScale $X.X the current at restricted million issuance reflecting million XX, million $X to of at costs in used to XXXX issuance million fiscal excluding XXXX, compared $X $X.X cash year. credit debt, short-term in was an net portion in March of due long-term XXXX, million as million, in before meet paid increase XX, was XXXX, improvement the drawn was debt. $XXX.X in March cash unamortized and $X.X quarter. $X.X $X.X portion $XXX,XXX $XX.X million XX, March in million. or long-term of the company's in agreements, $XX.X $X.X XXXX, $XXX.X working debt. Outstanding March $XX.X $X.X debt credit as primarily revolving restrictive of

Now, like strengthen impact the actions I'd completed the have of to to our manage we see capital to as through the talk balance improve and pandemic. sheet structure our we us liquidity about

may the April received to SBA. by on XXXX, years year, we due fixed and the interest the for guaranteed Program will the The forgiveness forgiveness at the At to of maximum accordance loan PPP the be assured Paycheck deferred amount of the agreement. First, cannot from PPP XX, to loan $XX we with in expenses loan of and loan PPP bears forgiven, loan, time, the -- partially or an the rate Protection qualifying be of has this terms in have apply the a per proceeds XX loan for up the utilized apply initial of we two from that terms we term loan with X% PPP for million intend full. interest a a of months, of is unsecured. Under PPP

are amended and be Among we used announced terms we agreed facilities, expire terms, liquidity our week, credit term-loan finance and maturity, more more December XXXX amended, of credit corporate including the XXth, credit as in to These can last amend financial loan facilities flexible an XXXX, additional The other Second, on and favorable credit million equity to provide clawback term incremental that and conditions. agreement, other working loan securing loan terms XXst, revolving purposes. capital certain security and negotiated facilities general relation $XX and contains for covenants holiday a substantially term XXXX similar existing of loan through pricing. the facility in to March feature. loan, term the and a to terms the period credit the

term XXst, revolving XXXX, May of million the amended million, and $XXX.X loan under amended were under $X.X the facility. As outstanding borrowings credit

underscore that amendment In the and agreements customary our $X X.X with million loan price provide aligned of addition sheet we us strike the conditions. ongoing manner to to with from confidence warrants term lenders manage fees, flexibility of to our changing lenders. a closing our issued macroenvironment and and balance in and These capital access a increased rationalization to strategically business our incremental is with

necessary to with financial customers' sales the now opportunities, continue needs. rationalize lenders, our with we structure of With our support flexibility cost focus as higher-margin to have our our and our we aligned shift the higher-value, covenants,

visibility. Finally, I'd this continuing our uncertainty provide have on overall And we, the to comment full like the to result financial pandemic in time. decided economy of at COVID not year our a The therefore, guidance outlook. as limits

However, as and XXXX. expect impact in on two last this discussed the of first call, disruptions pronounced have we of delays the in to fiscal quarter weeks more the quarter the customer fourth a experienced

over to revenues for net per plus that, for the minus loss $X.XX share, minus the or back outlook Our plus $X.XX per Jamie With to adjusted million. $X million, million, be let $XX me closing includes comments. share, turn first or zero, per minus or be and call EBITDA share quarter to be million, of plus $X adjusted adjusted plus $X net or minus to $XXX,XXX, loss

Jamie Lerner

the Mike. before our year. year about fiscal will will evident, us The come Question-and-Answer increasingly half the We're reflect power longer-term made. may believe Session half a and earnings optimistic of the of time. opportunities of you short have, though in way long period a happy the We'll first this for fiscal improvements reaction any our COVID second to questions now results answer we've Operator? We've the be short-term is to Thanks impact very Quantum of

Operator

ahead, Riley Gentlemen, question B. go FBR. thank at first you Craig We'll Instructions] Please Craig. our your from Ellis [Operator for take remarks.

Craig Ellis

issue, a all And the of the to are clarifications in both start the the demands COVID-XX the to things revenue guys, you're thanks comments taking with to detail regard for guidance. to respect for $XX With wanted related million the some first. guidance financial as supply, around and few or thanks quarter it year. -- on Thanks Yeah. relates question. there impact the just crisis of with Mike, is that seeing is the to any I

Mike Dodson

the Yeah. the mean, address I more many -- has been top but line demand of been would say that on it challenges challenged. challenges, chain. able our the than supply impact supply a definitely, hasn't the I from customers' in We've chain to is

Craig Ellis

And ActiveScale a that to while you of would amount macro it. Can a we level for very here, then be to how strong revenue environment a quarter? the should see Got about fiscal normalized reported the we're And in off fourth was think revenue start. ActiveScale? nice what quantify in

Mike Dodson

We pent-up that out revenue so had on to out did a we product acquisitions. little don't well. bit we mean, right demand or we know very revenues the revenue I of recognize break there. of call, was related as chute, business there a the separately It's outlined

have for know the years. We well. OEM-ed equipment technology We that very

something our historically. it's was in run So rates that inherently

certain So a is product. for se. addition it we think it's not Digital were fair I to believe to the largest per OEM for our Western that numbers product relates muted that going extent, to the move I it's as incremental say to But

think the I see we're of acquisition on out with other technology do the conjunction. of we some in will side synergy be that that to what and going products

Craig Ellis

Can Got your items, help I it. us more you. could in of understand of items maybe some just tone if customer and strategic business flip cetera? some media, you And then moving the we Jamie, we the quarter? through of as now health we when Where groups government, customer in in the started like first entertainment et Where areas moved were the areas like care, we've quarter? are calendar to different

Jamie Lerner

with a the behavior the was, behavior. the in there monies say for would a And extent, what spending. on that to media is in and is the just thing probably, then brakes all a greater operations. and change I started say continuing of up drastic I would first entertainment, Yeah. market slamming And opened broader enterprise

just -- we're see as say the hitting COVID systems you we May, spending the also new but normalize, if I That's this spending. projects April, just -- keeping would not saw to March, quarter is operations. So much things brakes. -- saw begun of related in that's maintenance. to And And paying we so people anticipating running. that maintaining

moving gone in haven't the new we've last them buying I've capacity, of we the three season, haven't projects the cloud analyzing somewhere spending and the new enterprises would to about mostly and weeks, I continued on bioinformatics, installed and the May, but running, including ways, healthy, new so civilian this but it's is they seen data. the healthcare, that we're unaffected lose sports to older projects U.S. us bought see in continued projects. big the would But have say I expenditures hey, their There activity are would large people is April hospital, them of that at the slower in have who've on movie the I else. up they and capital on to begin in activity them has I seen the It's we're start just three that operators a us in and or the return not that say, slowing want just we a couple or didn't see during seen that's finally, want providers I beginning -- say, time, television around life obvious keep from would talking stopping to governments government, and that new for -- have movie, programs with and start And they in gone cloud unaffected resume not capacity, of us, just we in outweighed been us we expect somewhat has of to moving unstructured put I've new keep the would shortfall two genomics, all projects But military the start seeing new that replacing weeks. projects sciences, and on did of pick really, equipment most for checked various So or from seeing systems new for us to forces, to forward. would are hold. continued projects and reaching government, our keep soon our evaluations looking last enterprises. them the We're U.S. around cloud be projects their have segment people us with And mainly projections of -- their or calling base franchises that companies say smaller signs that also looking and and say, have as that hey, spending on in to Sports world have people well the the starting their with but big projects. people and have this. down the amount part, whole continued little a people projects, development, are as resume. during seen schedule unaffected. that government been procurement, to say both carried projects. saying, seasons limited been taking undelayed. as operations of the drug system to on. been as have running again particularly we're say more I a behavior life keep groups

Craig Ellis

I if and just I narrow, in on hyperscale, about year. next for but some its does cloud broaden investors points, company large potential late or to been customer the some one think And of company year expansion color. could either customer looking feel helpful extremely base that vertical. the the have That's How the follow-up this quite

Jamie Lerner

Well, a have developed. I say, things of would number

that hyperscaler us would had that, equipment, to of for The and having it. needing now the is were has first into line were large slow rebounding. really our have is we They and up sight finding down. told they unpicking places digesting trouble better That --

several would dialogue. We have reach to advanced hyperscalers also out had to and like us new begin

actually are where vigorously. way actually moved them they trials taking have have equipment, stages and equipment of new -- One their an they equipment trials. in we it testing advanced to is The accelerated to that accelerate ongoing pretty have

integration and see -- healthcare enough We finally, internal build to the seeing build starting sciences out large to for are enough off of guys. the laboratories, I'd to data we the we're we of to think moving of like we data large the more a moving what you own. trial saying, branches customers agencies, to on-premise, archive, where cloud, physical be our large buy big number have life think And people us you can saying, work cost national and happening. genomic our just tested, to and we're need for automakers, being and the reach we're So, and us paper where government cloud own very and is we have actually equipment, amassing

but starting is enterprise. So, actually need not to large very a expand into telco, large slightly radically business different. They our hyperscaler different product, very

is makes becoming would to more robust. sales has seven-year But commitment, It So, is long sales commitment probably justified, a I cycle. that that, XX-year a customer cycle business, a long it's like also a minimum. say, once because I think that

the the the So, plane, the bigger the -- longer longer runway. the

Craig Ellis

for encouraging before sounds could question business. if and Mike, a just ask you the in interesting I That's the Yes. getting back final queue.

on equity helpful? what back element, you be could and with Following claw clawed that the the do its Is to covenants on achieve be able with terms or – of amount elements the have you that improvements Thank to equity? to any there? debt in back would a and was possible and penalty. with there updated on and it an fund to on A restrictions the reduced able execute announcement might how just the question on equity to color it be offering can the that claw does raise the company back is, the that you. be utilize are Any

Mike Dodson

claw the penalty. equity We now mean to able we Yeah. back Plus, equity XX% to X%. to that back, use XX%. The And we much equity. pay it can to claw thought we so up that standpoint. is reduced so structure, an it's do issue from equity how double were the can was I was XX%, penalty it's with off

So we and a amount that much able to claw could double we at lower were back penalty the rate.

– really So felt those the good amendments. about that changes we in

Operator

you questions today. thank Ellis, Mr. for

with from Lake hear Street. we'll Next, Martinuzzi Eric

Eric Martinuzzi

facility loan as want well. I there amendments on up to term Yeah. pick the the credit amendment,

talking things was FY hey, April, debt changes you it run better Was FY the is You more? that of where our let's mid-May. to look out kind originally like – with the little it for business these that our caused a a more, XXXX facility premium or what the about going to get were is feel delay results in drove early is longer, XXXX, to bit

Mike Dodson

and ground set We March, got on waivers to we revenues our revolver in lender. so term a when I game. we next the year was believe do initially like. both think COVID-XX could to put realized have one it of amendments We lender wanted going with we late both, a we to Well, – get look covenants, we on was what of ahead combination want impact more Eric. the a direct at get of And would then, visibility that the that point. that wanted only We the stake the to loan

all them the visibility, way covenant. better we able at it's out that because of a could better negotiate was parties availability through. So least, of – getting the two set covenants, so orchestrating all little other basically a the holiday we with And those exception to news the we're doing on good covenants the set that an

always the the it year coverage. outcome. But was on go So it's takes we're will we've final really of it it through think but it covenant you take, a a and very just got – flexibility to for lot quite pleased relates as a more bit to than time

Eric Martinuzzi

towards about $X short-term QX at is – that can not wasn't growth we if pandemic was wanted I as I the FY of guidance the throughout learn. not to debt There general, thinking of out quarter wrong in what have just and you royalty video. impact big figure think less I a need say that release, – in I because but end, Okay. kind dive slug mind, million QX correct quarter, and the we revenue, But my the of even. do assume into I'm of to that the generates there's The should what royalty QX, me the XXXX, there. still be to, press

Mike Dodson

Right. And there's be would line item. that I expect going pressure on to continued

everything impact initially. as moves play. that – of expect there backup the come – we're right is impacted of now. COVID-XX it We'd bigger It's transition that factors it'll is use be at just be as are will else in archive, to tape escape that the from back, won't that So and to

always as but to we predict, pressure a well little period always puts on difficult I between think as that's is moving generations some well. pressure see of as there the it

got a business from the really, are of impacting that backdrop. So two on we've royalties factors top COVID-XX standpoint

Eric Martinuzzi

call Jamie, have easy negative But the the or pretty XX with substantial it, the -- focus been verticals Are any pandemic. the any seismic arrival of, to doors picture then, results surprised this, your on came the new shift of Have here, negative, in markets? have pipeline product. opened the any out… analysis have And been kind down you last, big real on we got days just it's Okay. a the pretty there We've any since over right? prelim of --

Jamie Lerner

Federal pretty is our mean, I Yeah. killing One encouraged by. a U.S. it. that is team I'm lot there's

becoming our single huge NASA. programs work, attached. There's the are happening the in amount the lot national data that's from just it's NASA. imagery be in go of that government, more and warfighter with in just laboratories. going video There's everything a Mars unstructured to we with to military want of labs every a We thing We relevant do There's is to work a modelling, modelling. of space in there. disease huge And whether national amount to

is a area think that for big I growth So, just us.

onboarding the our pandemic. allow the it the are It's not where to They're the accelerating data, network, I've to in our cases. seeing our the move store generating they move and of faster. storage And seen storage video fast get storage right? just also it our not data It's we only growing. more our than can unstructured in but we I'm go -- what to is growing We makes faster that all not those data and predominantly that can faster, in storage from competitors. stay photographs. They're -- but the realizing is cloud on, our guys the think tech. evaluation I cases

or a our using remotely working or seen technology lot from to they're transfer from working and of I've So remote where are facilities. data home, accelerate people acceleration at-home

we're is becoming case and use becoming relevant. more more that prevalent, so And

media relationships, engineering, that data. thing surveillance built talked CAT coming the our cases. which about The large good do just in that be of have building medical medical genomic We're been sales and corner, we've in television virtual products got other conversations, I we've we more quickly work, I really thought pickup as us wanting images, seen right? used more scan but a in And sciences with than relevant life I've data, We're really people seen good the entertainment, in has the briefings -- briefing archive to relevant had uptick we other surveillance is to life bioinformatic just seen movies. And we're becoming analytics planned and on our whole analytics in video the we're having and sports, think predominantly right, we and to data, I've Okay, data, need. or turning the imagery, distribution centre of relationships, much that segment. the business well. seeing than and now I'm our quite sciences about

tighten tightened with, as a is is, And and it. we're the belt. we'd lot have is of come containment could I way So, I as can I we all our well-positioned live speed. We contained a to of the as think at with -- tightened And or our viable that we we our learn this disease things or look we to strategy out. much of think we've out subsides belt mean thought playing

speeding need a recently, a got But to seen. all helped We a maybe of the more out. seeing out of a the now just activity lot inbound tightened we've more. -- seen lean, I publicity lot encouraged just fertilize And And well. that's And points pretty to going that we're And starting it's I've organization. I'm Now than think that it and of And proof certainly economy we're we're innovative pretty feeling as more strategy activity. to this. business. up come I've ever laying we our inbound see healthier

Eric Martinuzzi

shoot highlights green floor. Okay. seed there Well, I'll I Thanks. appreciate the pipeline. those the of

Operator

we'll Eric, hear Craig-Hallum. Bennett from with thank for Chad you Gentlemen, today. your next questions

Chad Bennett

$X for million flow taking about the just the you're my Thanks speak Mike, loss cash for you thinking to to quarter. can how relative questions. Great.

Mike Dodson

year, our we basically you and it total look breakeven out. million. acquisition I minus from boil really looked our whole of at down cash in forward, netted the as Yes, our over ActiveScale. we comments, highlighted the operations our I we $XX CapEx is to flow use could cash or mean, When And of when plus

So particular, million -- agreements, cash that access line quarter. capital. of in our get as to position a expect as helps we'd to always to that's why to next still flows, the cover in additional well amendments But had able ebbs a been we've where we're bit we've credit little burn have and working our $XX liquidity,

feel address of we're requirements fund, And we that that support climb something We good can requirements very cash we well. positioned we think to we see. where the working as capital out any today. also are this, growth. it's we We So can

So positioned… we're we think

Chad Bennett

that was on term? was side, So the assume, the of revolver or I excess $XX million liquidity, that

Mike Dodson

that's term. No,

Chad Bennett

Okay.

So, debt can where -- is snapshot today? us the where you is of give a

Mike Dodson

the got its before And Well, higher, amendment. $XX million right, our it than you've was balance sheet.

So…

Chad Bennett

pretty your seems existing All spoke we're to to track. of and on starting And about your to weeks think Fed you I doing on environment, the last But to pickup a And the the side, starting obviously, couple very Okay. right. obviously, your hyperscaler, commentary then unique considering customer in guys enterprise least. see just, get well. a say in back be on

you normal tell? be, June we that to but quarter, better where September speak tough Just, going too to the would is at it again, environment look to a I know quarter, expect seasonality for early or than it's to this, if considering is

Jamie Lerner

are… We

Mike Dodson

don’t let visibility -- do out, look figure a then us take very been difficult, pent-up the why that so a as do it's is mean, I forward. think believe follow-up? We demand. to first when crack, this has I I'll for Jamie we you Jamie, we But is and I hard believe, there articulating,

more So pent-up that at obviously is business you've reached point. when coming because think that is point demand you of question. big the But this would got that

Chad Bennett

so much Okay. Thanks

Operator

hear we'll Steelhead Securities. with Duley next David. from Please Gentlemen, David go ahead,

David Duley

categories. sounds the better your questions. for like, some that trends across when taking are It in Thanks you my of your Yes. things major talk about getting business

or will in revenue the low so, this And the June safe point little in that bottom to cycle? assume it be is

Jamie Lerner

in me June I of current but the of will would and would speed, with the be the September front than ball, at crystal data And quarter. mean, a the say have today, expect, quarter us. course none bottom is us I better behind I

David Duley

times as as what the go, your And times for Okay. systems what currently? secondary your lead far lead storage are

Jamie Lerner

– depends different products in It of depend Tape so it DXi, there's products. what ActiveScale, that and mix, bunch a

eight get two Our weeks. shipped of time we four from to we enterprise XX-week hyperscalers. products have to large-scale products for specialized, when is to when systems purchase time. a Those The order longer manufacturing very lead more lead are a, predominantly

Mike Dodson

Yes. Yes.

David Duley

Okay.

hyperscalers times. had long your So lead

of you from sort so, probably have indication them… And some

Jamie Lerner

demand us give They things...

David Duley

Things are are some sort long so business, have to have better you from of in since indication them getting the times that… that particular lead

Jamie Lerner

Right.

David Duley

Okay.

is… this So

Jamie Lerner

us… give They

David Duley

customers …based are doing. on, based your your actually it's gut what feeling, on

Jamie Lerner

Yes. into written demand future. We get manufacturing schedules the going schedules months and

David Duley

that billion $X in drive and a numbers. big at $XX on of but Now, think they're was up their know is in soon? your sort is way mode, digestion it to or customer just billion like hyperscale me guys revenue wouldn't that I of would XX% business increase but table some key you back these here be in customers, year-over-year the XX% significant the

Jamie Lerner

Yes.

David Duley

have questions the now. I That's you. Thank all

Operator

information Mr. that for Dodson, Mr. Lerner, thank shared you with your you today. us

no additional further it audience. I'd have remarks to you closing or to from team any questions have. that like our turn leadership for back the We

Jamie Lerner

on just And in families be next guys And phone back today's these call. forward want during quarter. times. safe are And unprecedented I speaking to and days. your you you to everyone I Well, look for thank hope to the then we'll XX

everyone. thanks, So

Operator

does And do your teleconference. and thank gentlemen, this for conclude you participation. Ladies today's all we

And your enjoy evening. we that disconnect lines. now the may You your rest hope of you

Quantum (QMCO) 24 Jun 202020 Q4 Earnings call transcript