QMCO - Earnings call transcript Q3 2021

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Operator

Good afternoon, everyone, and thank you for participating in today’s Conference Call to discuss Quantum’s Financial Results for the Third Quarter of its Fiscal Year 2021. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Leanne Sievers with Shelton Group.

Leanne Sievers

afternoon. Good for XXXX call financial you third discuss today’s fiscal quarter results. joining thank to conference Quantum’s And I’m Leanne Sievers, Relations firm. President of Shelton Group, Quantum’s Investor

Mike under you can Joining the and call a copy we the we Jamie Relations slide are be website access Relations a using Dodson, at section. in Quantum’s and on is www.quantum.com, today’s issued presentation which website with through me accessed that afternoon Investor CFO. PDF release Lerner, will press on This website the today also CEO; that a section. Chairman is be also conjunction may a and posted IR link in There as Investor the

information services. other based the statements as to hereof. anticipated reminder, any pandemic can forward-looking on during Quantum’s adjusted As comments any than net relating income, COVID-XX and statements Quantum may forward-looking. on expenses, impact a items, in today’s the not Quantum competitive periodic Quantum’s and XX-K included company’s and of statements limited expressly annual products the otherwise These filed with are available known flows set Factors made but on the share other of from risks revenue, results, performance report forward-looking to cause or section SEC. in risk future include factors other limitation, without as EBITDA, to risks, historical materially quarterly implied those Risk These its Exchange including, caution the as by by projections information, involve business. about unexpected development, Security forward-looking be to Quantum’s events actual statements. call forth or forward-looking and statements of of uncertainties risk financial on in facts statements, Commission, margins, or obligation are required results or the additional financial market and on in All expected changes listed concerning may unknown update uncertainties those include Form information whether with that new reliance these deemed on to, the or well a conference law. alter factors statements performance report result the and as filings advises and day disclaims Quantum’s More statements All as forward-looking entitled any Quantum as detailed factors Form XX-Q except and cash the statements. statements, differ adjusted

additional release and call press of during company’s will and in are which will certain time, conference at available XX release of the non-GAAP GAAP terms. website. discussions details. and at statements to Quantum’s Additionally, recording provide management in least this days reconciliations the unable of Included for listen a the GAAP press Those to to and include this measures call company’s of Investor non-GAAP items, you the financial be definitions section information and Relations

CEO, go Lerner. like to turn I’d the Chairman over Now, Jamie call Jamie, the please ahead. and to

Jamie Lerner

vertical of seeing making we the flat consensus we in weak us joining COVID demonstrating Also, by growth sequentially markets. on call. quarter. growth gradual quarter. expect quarter be core our well over and and next consecutive second our announced quarter, the our solid exceeding a as for transformational well Leanne, street progress very today’s revenues sequential results our revenue thank we the off for were and current what third fiscal the lows guidance outlined initiatives, and today, recovery you, with all I’m coming our of the Earlier first seasonally the in is typically release, as in Thank you quarter encouraged we press fiscal related in to are some as

reflected in quarter factors, protection use sequential about in in third including year-on-year businesses, the recent well acquisitions. core cases product initial growth data and a a as in our and highlights entertainment of talk new as some by I’ll results these recovery combination our and and and media of Our driven introductions new markets moment.

progress quarter in strategy advancing and significant made in solutions. also during data unstructured We of be to the the vision terms and leader our video

model. which storage with During system company to centric award and advancing user portfolio, of while a our the data solutions-oriented center business file We’ve is network November, our leverage and streamlined software made expanded StorNext ActiveScale store, infrastructure. customers X so interface. manage storage added and of of speed performance a to quarter, on to and of NVMe manage production, from to that also revenue reduce all solutions We’ve of X object the introduced its unstructured we is simplified up we latest expanded In to a that subscription a hardware transition with purchase altering available a lifecycle, data one-time winning version recurring be their our our simplify costs easier are ATFS X, portfolio and our can protect features targeted StorNext representative basis. across a system. the an new file StorNext

can deploy, network storage into prospects can install them manage data easy their and ATFS to it and is valuable classification. attached file of new trial It ATFS by it easy how platform better data. Our visibility help offers download use see data levels integrated to to and

line We forms their help new ransomware secure also other against models new and to customers attacks. expanded our cyber data ActiveScale features of and with product

products. arrays from week, based we early of the on HXXXX fiscal very we storage hybrid defined are these with launch seeing Series a server. more in the of customers, single it CatDV and is that all software new up converged encouraged as StorNext appliance same architecture winning as ramp our F-Series. offerings, new traction such hyper platform, the StorNext of early with the future this H-Series an announced storage in in Although line basis one earlier the in is by are run Also, award stages QX This as a the for tightly product will media and integrated we

also analytics business helps portfolio software AI in business profitable December CatDV We value and unlock software portfolio. that and in unit is the to CatDV added an data also their of our our to acquisition platform Square growing Systems. our through the add Box customers

as large product markets. data. the any working vehicle such already CatDV our our growing video, are research, with integrating design, other potential sports, segments see to market software corporate geospatial on markets We production education exploration as expand StorNext unstructured eventually use with dealing autonomous reach to government in and video case to and such genomic expand We

to platform for other an analytics video, of are and potential about We images valuable and the digital as grow excited this data. forms scale file business AI

comprehensive With for -- the and products have analyzing storing in the lifecycle. data enriching video, we’ve along managing last and CatDV of addition We with we built and it its new a year, now protecting other unstructured our more across portfolio our as leadership steadily services the video and data solutions with with wrapped deal in materialize, size results position solutions. portfolio around are we is further we expanded solidifies them. seeing sell more increasing And our introduced average

growth, fiscal and by Some combination QX of the initiatives. from recovery highlights new a contributions market additional of products include, driven XX% sequential our and from product

year-over-year rebuilding with significantly and a November, of we for ActiveScale Our we was resonating introduced first small contribution our up the encouraged pipeline although, after and subscription we with expanded revenue base, how new software partners. first quarter-over-quarter, is new starting our and are products closed year. from products and had portfolio from solid quarter the in in this the deals We part customers

from to We made we’ve solution sales. are transitioning also pleased product with the progress

number increasing been over sizes a steadily record years have deal quarter. year-over-year. figure Our in XX% the average seven past the six deals and of and increased We closed two

We partners. larger at and result a and customers and and increasing are more our as deploying footprint key solutions, complex relevance are

a attaching robust job these contributed to services, doing wins. better also of We’re further size of which the

than hyperscale be Although, our level lower quarter business and for of the the current is months at our nine the will the same revenues last fiscal nearly the for first the hyperscale sequentially last in year, year. hyperscale year-over-year, we at full year year period business expect grew same fiscal

Many And as also bringing of to it driver scale in large generating only the past, These market data is with we provide. the companies, solutions important well a and initiative deploy been software archive competitive that As Quantum, our you as a will to offers not to the hyperscale valuable organizations customization sell this now be enables of indefinitely and these solutions and also showcase amounts but we move are public kept and represent expertise forward of that unstructured unique team the the hardware. position value I’ve leadership opportunity customers strong This Quantum that key must us. working truly these needs. us services to advantages unrivaled in and storage establish help Quantum enabled for tape us our as has with will high extending to to web a opportunity are largest for discussing massive Providing able cloud. us be much not to enterprises. engineering archiving infrastructure in with market hyperscalers be credibility growth and reside to along relationships continue the world’s meet for and larger their will

bringing us further Most top to Pawlowski validation experience of years services attract months, storage Chief to few and developing storage, of innovative very of past Development and as have the software our high as Quantum. Brian over solutions. Officer, we Lastly, level vision our continued joined strategy, a leading transformation talent recently,

in experience two storage was career, network key employee protocol As role at and Chief Brian the system improved Architect Microsystems. expansion of overall decades over as file the playing early Sun NetApp, co-architect all nearly at at platforms. flash the in served for company’s his XXth Previously Pure he Storage, he a user

with Silver SVP is as building appointed success acquisition businesses working experience Packard software its worked a and Systems, customer in Service improving overall Office Symantec, for service contributed services, and to Peak and Customer at Enterprise. is Software, deep Customer Valentine Veritas as customer also also technical support Rick the including Rick portfolio. Officer We Chief expertise Hewlett leading the and where leading by our he

at in expertise of Delivery former on Cloud also sales, advanced for System, company. in have specific software Software LMAX, financial Officer depth international executive has and Prior our newly We business been Square a as focus Clack, Deputy channel Dave to our Chief a added CEO worked technology of Box the Manager General expanding solutions. key Systems, talent formed and Technology, diversified unit. Analytics Dave Box Technology with Head Square of and appointed

McAfee. addition, transformation call experienced In over Program Project transition of His a is to With and business a the software financials. was led at attracting Mike? key and the our our of discuss strategy, that, Engineering, Mike in accelerate will CFO to testament business. Dodson, services success to Director talent and turn Management Dave I’ll industry our

Mike Dodson

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

the increases base quarter. resonating devices previous on combined from and quarter verticals, our to sequential mentioned comments, Jamie XXXX software increased revenue demonstrates our the revenue products and is for the royalty, systems, Revenue million the traditional increasing the March our with COVID the growth low by a $XX.X broad in in fiscal quarter. compared $XX strategy million $XX our to second As customers. driven new $XX storage our the in media. Revenue his categories XX% contribution from opening with sequentially as growth continued fiscal third across XXXX in recovery reported sequential across secondary market guidance million, related our of was to primary quarter exceeding million, reflects quarter consecutive This

the on primarily XX.X%, of last marketing entertainment revenues revenue is are is due increase also period. in over in efforts was as revenues, in support operating had new revenue the has and during to encouraged recovery This the commissions of in and on and impact year’s product to end third or expenses revenue $XX.X fiscal year sequentially, $X.X team. our a expenses and The third million million expansion loss million quarter in of the $X.X period. of on the XX.X% half same a XX.X% or year-to-date mind, product $XX.X prior a in XX.X% $XX.X significant in with quarter income fiscal loss revenue, third a in $XX.X million $X.XX last $X.XX loss in to increase year-over-year just lower product net due XX.X% in compared We this XX% service primarily a sequentially or segment. signs per early for and the of COVID the expenses share million contribution Keeping basis. running reflects fiscal were loss our net an compared was was margin prior an in year. the the in per sequential releases from year our or The by per basis. sequential or mix, increased the to and of quarter million operating Gross and third to to the year-over-year quarter lesser business. up in million, market GAAP higher Non-GAAP million level sales $X.X quarter. share extent, to due a $X the of operating quarter share, increase diluted million a media to ago XX.X% decline $X.X $X.X or the as $X.XX quarter of to prior revenues of million an compared quarter increase of net well royalty and GAAP product ago leadership and the year-over-year

restructuring in non-GAAP net quarter, $XX,XXX of comparable was XX.X prior on quarter, $XXX,XXX share to quarter loss basis the the compared from the in loss of shares due third EBITDA breakeven a the million, increase per from was the whereas calculate fiscal is There’s share million non-GAAP share net and profit full $X.X stock an per XXXX. a adjusted quarter quarter during fully $XX.X was charges, our adjusted third share shares, in million $X.X the year press million of adjusted of the directly down XX.X to quarter. count fiscal million Excluding or the share for measure to or prior diluted in but count to fiscal income Adjusted non-GAAP our release $X.XX Form or million in of third charges prior compensation, share released XX-Q peak results per GAAP non-recurring the reconciliation $X.XXX most The was of used a in $X.X period. diluted income per loss in the the GAAP pre-COVID and both the the today. net

on credit debt basis after gross issuance the $XX.X XXXX through million Related for liquidity cash balances an $XX.X December levels compared include Both balance higher sheet, $XXX.X basis XX, a was and for This agreements XXXX, the basis $XX Now cash million and million debt at after cash was a December and issuance million million turning costs. compares flows. net a XX, a March costs. at Cash under quarter. credit debt XX, XX, million and XXXX. XXXX, unamortized there’s $XX.X Adjusted on on to million capital quarter increase increased $XXX.X the at debt gross netting $X.X equivalents outstanding $X required covenants were to September restricted term receivable during million build at the XXXX. end result $X.X of $XXX.X and in of the the revenue Outstanding of financial the it debt to third facilities, million fiscal $XX.X an million holiday prior on of to $XX.X quarter. certain short-term period to million restricted was This at cash. accounts the of reflective by working a fiscal from the of million was net unamortized June basis million a primarily XX, netting $XXX.X

there end down in Since cost fourth During timing paid the the quarter the third been strategy to August, valuation balance. the the This primarily debt. in quarter. receipts has during fiscal of used $X a our address million, high term pay a Analyst of credit overhang was our draw to legacy which amount company’s by small Day amount created on quarter, back of the the the outlined fiscal we’ve at line was approximately the to due the cash on

us a of may equity provision clawback of negotiated This the the to favorable us year. we until down this to XX% available that pay of premium provision debt allows to call XXth make-whole a more term outstanding you reduced up at June expires had As recall, is expensive X%.

to market has XXth, As of for the statement which a million November or at ATM facility. $XXX been necessary such, on we allocated $XX equity filed million, registration an

shares since reduce utilize been it’s facility to several it to release plan in related help do, something yet financial the to we not quarterly since not months. provision facility ATM of any We this tool advantage take us this quiet debt sold over our the have to but equity a under opportunistically is next the period we’ve rather of results. We our need clawback to

the Excluding up cash to Box the term $X initial million the representing acquisition, will from to pay payment all Square down proceeds for offering used be this debt.

the we optionality address considering structure to of months a generated make-whole for flows alternatives. Related stated fiscal of provision our nine have XXXX. number capital Following June, in increases the be cash previously, from and of the significantly first operations will to we refinancing the expiration

under effect of and from for cash loan changes $X.X and generated accordance increases of in of nine in was assets of the use be Systems. during million million. forgiven Other million million with capital the resulted accounts of Other during period month by period cash of sources borrowings million revenue. payable Square which the and Program, and for decreases working $XX.X cash the represented initial deferred primarily to included term expenditures net expect changes of Before The uses cash of debt of $XX.X of in Payment borrowings million the cash agreement. we inventory Box operations accounts the fiscal Protection $X.X terms in liabilities, and capital $XX $X.X the first net consisting XXXX of net payment included in

which XXXX, levels debt, basis flows fiscal pre-COVID the from free interest at we $XX surpass and this impact address significant from a million term limited we the current COVID. expect represented model cash year approaches to an the business on our As payments on

our Finally, turning outlook. financial to

quarter solutions, contribution our to across expectation and million fiscal minus market consensus plus what minus the for revenue verticals per I’ll EBITDA we share/net loss our seasonally million. plus and plus adjusted street for fourth resulting minus software the for $X of or our to the per adjusted be or With of earnings expected represent and flat sequentially $XX breakeven increasing new million, per is mentioned, $X in turn to income/loss million Jamie well the revenue As from over typically of a and Jamie $X weak current or breakeven company. minus be million, continued adjusted recovery expect is quarter $X share $X.XX that, comments. back net or call share Non-GAAP closing plus

Jamie Lerner

a solid of of for second quarter this sequentially the In quarter second progress Thanks, Mike. very both transformational quarter and growth summary, demonstrated guidance. our Quantum, was significant growth. our our consecutive core in we products toward business With initiatives through Operator? the have. revenue now of and We added our questions exceeding markets you any will to new may our and key software portfolio take core recurring outside and markets drive to that,

Operator

phone the Your is Instructions] question from [Operator lines from coming Ellis. first Craig

line is Your live.

Craig Ellis

Thanks the and for congratulations on guys. strong taking questions the results outlook and

Mike midpoint, source and mentioned housekeeping I was third seasonally in a the think different where million versus mentioned Just primary item quarter then the of weaker. And you the Jamie guidance to typically start, quarter fiscal fourth fiscal businesses? the upside is $XX that

or that are So of groups? outperforming takes either customer groups gifts you’re and some different given the across that product what

Mike Dodson

the with service minus flat. our the guidance, was up increase to plus really we outlined we Relative across was all Yeah. exception the of products, verticals, script, everything an or the all as saw in

explains large saw for $XX the for we So our a part recovery really the in million business really quarter. broad based

Craig Ellis

And the Mike? then fourth in give takes quarter, and

Mike Dodson

Yeah.

environment decline. in reflective, strength guidance -- the of -- business. -- hyperscale stronger staying seasonal a see it’s scaler that it’s than business -- typical the of That again, have Again, million given flat. is We $XX we

meeting entertainment expect to continue recover. to We

drivers. going that stronger the forward. But key there. Those cautious should be We’re are

Craig Ellis

comments turning Got it. some about product. the the And new maybe of to

gross noting product So one the question, the segue that second margins XX%. into was for consecutive quarter

in higher So that nice to portfolio value. the think I what suggested drive you gross Jamie, towards margin, consistent you’ve with wanted the past,

and with this, XX% and now and that be that and is level So with and be those become? quarter? were we to for XXXX? substantially grow go there takes should of we is really margin refreshed or products that through the question and launched gifts ActiveScale calendar products fourth expect is that How were one, would as the the Box level regard gross Square some calendar sustainable could our expectation a What in their to in materiality businesses

Jamie Lerner

is the together cloud. a to products multiple goal larger combining our deals point into solution that software, on mean, more sale. sell glue multiple result a on it’d of whether premise or ties are products A deployed I Strategically, be more deals. And larger Yeah. is product versus the together a and

solutions is to be goal mix by our sale. value driving more a software, to an so individual greater and greater higher product mix And on complex taking a services greater margins just of of than

characterize to able point transformation But in out And software as going customer may how to sales take and to and Now, and going able to which days started that a speed give very make just we’re these we be place? that. place. don’t data putting characterize mean, speed view, we’re better to we exactly I how that’s really just detail yet enough in of From enough have trend. to multi-quarter early in the model that think November. of data be transition the to simply able I don’t to you take my which that the products be this than is going to in Mike, have to

Mike Dodson

forecast very November. in metrics builds But Craig, the we it’s just provide intend the what software as started. this every at subscription to transition. rate to information Yeah. and products I just We it the more add announced point, tell. mean, it We business. related to these more hard would just to of business, Yeah. to for I that difficult us is the is, quarter scale,

path. So just the down starting we’re

Craig Ellis

Jamie. Fair color, enough, Mike, and thanks for the

broadly. the hyperscale just if within an can on update wondering revenues set more secondary. give just nice us Lastly guys, you I’m with engagement customer with progress that

three? which the to or the if through you go mix ‘XX, geographic we so, calendar for beyond the should engagements, customers expand of be And revenue color can other on current would we customer of number helpful? dynamics number any expect derive As

Jamie Lerner

mean, needed or energy And Obviously, I at files mean, software, goal tiered organize hyperscale and our power Having billion if all started is. strategy problems with strategy. pyramid, need strategy. is just put in handful eight we customers is software, efforts speak install customers Yeah. to XXX put great. in software, certainly lot one of that’s much how customers. it. just base. all or but the energy archive solve pressing the all We got also XXXX, a cloud large buying we’re comes million more accounts strategy. to web movement but not there our that’s next the the of top of that very increasingly several data But XXX the that diversity of of hyperscale, of we have so a could I beneath longer. with and the an our to massive in to maybe they to I because at is, And issues our down. the -- software top two archive need more cataloging scale a with sales scale are decades, XX just our have the But And that which certainly they companies, the can we their to having clearly, data in then we’ve Global not of to archive for

our much three the you on customers pyramid. widely so and of can aggressively than base value place services, our and or that with top more more margin that that software four on we that value broadening more at So to can more top players the the we’re drive it out broadening

Craig Ellis

helpful. That’s Mike. Jamie. Thanks, Thanks,

Mike Dodson

Thanks, Craig.

Operator

Martinuzzi. coming is from question next Your Eric

live. is line Your

Eric Martinuzzi

it media I off Hey. say, then XX% kind a curious vertical to but to follow or if they I March recovery, the a the they versus relative business that hey, that you year that all question in the am we think and by got to with is we versus ago. just saying a about December in is -- initial had What with recovery vertical. qualified know get being things you qualifier better better, entertainment regarding up and of obviously, ago? year get say it’s better think

Jamie Lerner

Yeah. Angeles limited sports this And significantly touching York ticket seasons. on better. rely or I cannot know that able to Certainly you New sports as Los are We know up, in are it’s filming would permits get under pressure. say that still do. you quarter, got playing still right? that better sales once easily were and We short they

So it’s an that’s pressure. still under industry significantly

vaccine. moving vaccine Now, but because continue it’s again will -- we’re the there rollout stopped. time to at -- industry my slowdowns the it And variants, rollout. belief in in pace. I to mean our that cautious in point a right? of it’s was And sports almost slower and recover seen alignment though, in seen it stopped, we’ve we’ve first was the in that in now they mean, I television quarter, fiscal when just movie I a mean, it’s

I’m of recovery, And what turns front know at in that so its speed, exactly us. also we I’m rate, optimistic lay about what don’t but twists new cautious and what

also we’re we’re -- cautious. So we’re seeing improvement, not but we’re euphoric,

Eric Martinuzzi

Yeah.

versus And media entertainment XX days at that now you to so change? look were would how and pipeline in ago, if

Jamie Lerner

it’s and think to they’re But say where leaning in not I are people building I’d strength. they still have into spending projects.

they’re behaving short caution range for I with well. think as two year, buying They’re buying not projects. for out. years They’re one very

our is but of a it’s that entirely is. in how I they think pent-up Sports about roll out too. demand, a correlation a think quickly I how assembling, characterized human mean, vaccine right? recover to and caution a effective lot to there’s can So vaccine business of going that’s it’s I lot And contact. humans And there there’s a by recover especially close vaccine, assembled making it’s it’ll in with assemble feature people assemble film it close the that to and XXX extent quickly that will movie, a contact people assembly, can in the to out, XXX to a extent longer. entirely ability come drawn is we It’s about and people. take

directly assembly. vaccine and it’s So to the correlated human

Eric Martinuzzi

the fourth the to were December quarter a on you new fourth last the think then And in said, progress in still hyperscalers, the you going Is that add I quarter track? quarter. Okay. then with and two

Jamie Lerner

trajectory. business Again, plans is their that always Yeah. they But loading yeah, share The don’t hyperscalers. we’re more us. on with

other load We’re scale, web you rollout some starting further characterize think some well businesses the some that as pyramid. accurately. telcos, to But down I

Eric Martinuzzi

that’s side, at to least Mike, QX, Q equivalent QX the Okay. at gross that. QX to -- and the margin in roughly at guess at least similar this we for on question us similar I And and the the margin QX. EBITDA anticipate then, the versus given get Should revenue midpoint roughly versus midpoint equivalent OpEx two-part the to

Mike Dodson

margin gross be reflected. relatively QX and Had part in margin were decrease flat And should your when we in -- the an The mix product mix bit QX that when between was? of QX question then flat, we product to unfavorable of Yes. little second a relative saw QX. relatively

Eric Martinuzzi

The was… Yeah. operating expense

Mike Dodson

OpEx… The Yeah.

Eric Martinuzzi

Go XX. … ahead.

Mike Dodson

minus become range. and or be But Plus operating the the of expenses types enter audit Yeah. in of to pressure it those under going same as they’re we the annual as relates some to QX, or minus things. plus

Eric Martinuzzi

lines do your systems. the able quality then kind you’ve certainly lastly, of, been to talent, of lines, you kind Jamie. attract two sort of Quantum. There’s got of have primary some inside storage two And -- business you Okay. The not

secondary storage your got systems. You

You’ve both those new products adding been areas. in

product a for you’re appeal from to this the attracting you think As new Quantum? town do attracting what perspective, people is what’s

Jamie Lerner

delivered business. and core business But and our really analytics and And secondary business, fourth mean, business more service. our our software is I of are as is primary business to cloud services I and biggest lines of expanding really going then line our of products and more differentiating, and have we be we’re a our would the where certainly characterize four storage. Yeah.

that industry out, bringing three press think there’s top the that really we things, insiders as maybe two So I here. are

strategy. is First

is lot the strategy I think resonating people been and bulge large who’ve a storage at with of very infrastructure companies. bracket

and move think they us and actually they make to have execute with the leadership they I only the as feel culture but products, this strategy, not get done. to it, build a certainly that combine acquisitions, have on view strategy moves to I make thought we that allows to feel the that that it a

both we and work the as validation it’s that culture can just the done. validation -- a it’s think I the of of So this get where a strategy

executives, question those it’s of with with it people good culture think, the come it’s where and be successful. a just execute customers strategy think marks a now and I two people ago and can years as, top and were resonating things the I view amount

Eric Martinuzzi

it. question and Got Thanks good both. for taking my Thank luck. you

Jamie Lerner

Thanks, Eric.

Operator

Your next is Bennett. coming question Chad from

live. is line Your

Chad Bennett

taking for questions. Thanks my Great.

questions just that on think I call. few and Jamie last So made have it was hyperscaler the you around progress

on track that? you end quarter. think of fourth a we production the buys making I by still for the indicated fourth Are hyperscaler

Jamie Lerner

Yes.

on this we’re qualifications. think delays with of as rollout. closely. you LTO-X many track finishing track their in buys, There I Production them, been have the

new coming a of of with LTO-X. around to three on has it’s coincidental rollout now, happening So they correlate these been least that’s And the at LTO-X rollout comers lot delayed that not till the now June.

and down certainly on LTO-X the have or hard see. they’re their hit coming of longer to to they’re may they the And have there we’ll LTO-X. little LTO-X these how I their But at the analysis, out trials, to to and be they’re we’ll maybe throttle of if they newer think some customers look production impact So just a their to wait see end rollout. testing holding coming player fourth for

Chad Bennett

it. Got

Jamie Lerner

And…

Chad Bennett

Yeah.

Jamie Lerner

out. end That’s just how just XXX a result away. going don’t I it I buy XX the we’re whole only same. days see much days to know have is or to stuff … there’s they how days -- think to plays But new when generation. XX the

Chad Bennett

appreciate in mentioned, the that you different thought new interesting, to also of your primary was on hyperscalers was color of No. thought into I but pretty probably one into one it which product able you’d storage be And a sell I quarter. early you think a then, them, I that. fourth

Jamie Lerner

Yeah.

Chad Bennett

also then primary And that side, this address those software some tied, quarter. on LTO thought you secondary headway software I maybe both you make around storage in the Can primary those? right, or you assume really aren’t so. and management

Jamie Lerner

your storage, pointing saying data, friends. that your want retrieved you’re has One now, add for of We cloud want to of have storage, cheap think, more I data And necessarily, is company what a it mean, storage. actually to tiers They customers storage tape, the is allows I different slow the many more organize them of don’t types seeing hardware. to fast we we just we’re us software as data. capability. storage, Not write are --

software are your enormous and else, software so software tape higher and want on rate more the hyperscalers some a the of build we and tape. want just being, seeing we’re software storage So that nothing hardware to tape us where everything allow manages trend take care attach and that of archives like, that and we management we will seeing the by ourselves

hey, increasingly, and in speed, high cases. We’re speed software seeing three of not interested some making we products high announcements about them our top slow storage, interested rolling archive And players you’re for speed also saying, on your of we’ll seeing out some the are you storage that. just there’s we’re in more speed, also and we’re some high other use cloud for be archive,

storage. other a their where on on there’s storage different tiers of edge deploying different of engagements variety We’re with and we’re hyperscalers working

-- So, yeah, I software hardware now hardware, some from tape management our think, tape we’re to storage hardware. went software, and software tape selling just now primary selling and of we

Chad Bennett

fact quarter Can product that we’re you December -- it’s in of just… of, are breaking headwind up And you into your light much and in now still the especially little And the huge has -- software it and held cases. solution a it? on Got use success early. then you as selling kind I there new just is you’re M&E. out and now of kind revenue addressed understand in a products and software the bit, as But that new that early some are seeing maybe

Jamie Lerner

Yeah.

Chad Bennett

the Jamie, ago, or ago, overall -- year level early, of or I incrementally where sense? you’re any sense, a are us of you and or what what And storage a cases the software, know in selling … in that kind the it’s ecosystem that storage relative in if you kind replacing competitive to of to primary type use playing kind a and layer it’s give solutions you year now. management the were whether and today of of where what makes potentially in, you’re wasn’t be would

Jamie Lerner

Yeah. question two enterprises markets vertical there’s technical then and I there to a entertainment years media to ago, I think predominantly say sold and mean, think, a and also would a I there’s wanting question. we and -- I do backup.

to sell If you customers, and We to backup can now have media forward just to offer fast today, more the enterprise them. both and traditional entertainment. we

have We tiers We right? use of have, storage. gave to were we up sales didn’t to to didn’t use there those storage flash people. So other

that. Now storage. we that up have have Isilon We to like mid-range We EMC. didn’t someone would give at

ATFS, have -- we Now, mid-range. actually we that the with

filling we’re the out so And tiers.

them So storage to customers some you had now with sales. of the vendors. we where buy can but other of we instead the from gaps need sell the existing can end-to-end they We do range fill saying, you Quantum, gaps, have now full can competitive

So we’ve had can for we more. the who them many years, customers for just sell

to their that in we’re understand illness upon COVID-XX genome. their has Now mean, gets is of like, I the the their really vaccinations also the sequenced on gaining becoming new Everyone genome, genome impact of genomics. traction impact genomics right? important, areas,

in we’re genes. kind are much gene society, a more about we of a collecting a the more that as data. genes, eats that And sense up commercial, analyzing just so like is TV And it

millions of gigantic are more those software. up and see coming And genes. repositories like end genes lots of station. those help millions so metadata I us you at have repositories me with and keep saying a organize news of different to humans their you’d and And genes companies like sequences want and to more looking

say… and So you they’re name, you if have file million allow looking just CatDV XX things genes, that a ATFS can’t them give to at like to, you you have

Chad Bennett

Right.

Jamie Lerner

and age, need to number, lot from we’ve that. patient And before metadata this never their is and software person had a and to is male … of file. around that this you build this that is just a built do now file really this of we

in surveillance selling we’re genomics, business. area. X scan, video, where we’re we’re expanding So surveillance, think increasingly we’re in more medical into deals everything, the imagery, Ray, inroads our more video just I of again, making CAT collecting into again MRI, verticals, that Autonomous more existing in and seeing more lot they’re verticals, a into expanding

are more engineering, fortune is a solutions new help that’s our them, we we’ve So all we’re single products, successful think traction And vertical, instead products. a have, branch seeing customers them selling And a into now we we’re having then together had them the selling of branching the to and of I why compounding historically product to verticals. this I to think software recovery, new just we recovery when good multiple guidance quarter into the and new of these and sell it tie function and we our and but strong problem. are solve impact and products on business

of both those We’re seeing the impact combined trends. of

Chad Bennett

the Got it. nice guys. job quarter, Great and on future insight on the

Jamie Lerner

you. Thank

Mike Dodson

Thanks, Chad.

Operator

next coming Eric Your question Suficher [ph]. is from

live. is line Your

Unidentified Analyst

anything of on can but state deliver, quarter. constraints kind talk the if where just of Thanks and were your the supply like was your to supply you a question about taking from? and any chain get talk component you solid Can chain able or Yeah. about for you there congrats that? and Obviously, you components

Jamie Lerner

quarter. manufacturing our hardware Mexico supply subcontract of footprint. really constraints side. the any We a largest -- use the see We one the We during a in didn’t Yeah. a of majority chain the firms out on with

on haven’t really seen front. we any impact So that

Unidentified Analyst

you Can talk customers about that any issues, Okay. any were sighs? concentration customer

Jamie Lerner

and customers classic exception per we Historically, customer XX% the a have that any se now in every meaning. Yeah. haven’t doesn’t had the represent then with distributor concentration we’ll really of concentration

point. historically very been our reached the would hasn’t standpoint. that limited impact hyperscaler customer have have XX% from our Historically, that largest we customer customer and So,

from our really, So of business our issue much model standpoint, standpoint. not an

Unidentified Analyst

Okay.

little NVMe. they are customers? it? broadly by the Is In then, adopted the And using NVMe has talked you how been how a NVMe or you end-to-end environments, about Okay. bit can it discuss

Jamie Lerner

Yeah.

they think put the using off model. the to very accessed, that that In done they’re be needs get it and then with flash on data of they’re it tiered there. I NVMe they modified high way it, they when data put a that in in speed, is processed,

in see archived rarely which technology when for object slide to we of speed come It you. decides is And X it organizes on soon slide an could down movie, a it you’re that for or and sequencing editorial that’s And is effects be, I that you still of that. do that. storage organization, if would biggest a way the theaters. movie, tape movie just visual they and archive end-to-end you could be new, the or to And disk thin gene your but that review do have where you’re we watch a it rules. see you’re movie, a review, need So, storage. disk deeply fast you’re deployed. play then then it doing it be a gone, organizes NVMe. there’s can to storage as out and to I we movies that down NVMe enough object be kind up done have based it NVMe, work, What software high can when tier very even tier the that a deeper can disk, to the typically or policies that then does a it be of our you going archive should And store then on developed idea And wealthy of in on broader on and then software, that it’s as launched it should when to the when doing for StorNext tier cold use dynamically see and if NVMe,

they and seeing as policy files tier their use and cloud and us from movements cloud, move to buying those software and the customers they orchestrate things tier our more all I’m from So our to engine workflows. those go and through cloud of it back even when to of the they to tiers more all use

Unidentified Analyst

to comment of adoption terms in think And AWS. Okay. with then last the SX SX, work solution Any there? introduced a one, I an you

Jamie Lerner

down how thoroughness talked had in also to And ActiveScale we we’ve and outside locked think in files lock protection robust the from you incredibly just easy SX store thorough and of it, to product impossible it the how of that data pickup object the about or I what very very scales, that you scalable, it object out SX really that it’s your the to up storage we near to very that lot was ransomware a ransom. so not only our recently someone modify your make functions product, and of hold but run, to but for part just lock strong have space. is because of most has in use, complete, elegantly or them to files the added easy your regarding implementation, of most implementation SX and

Unidentified Analyst

good. Very Thank you.

Mike Dodson

Thanks, Eric.

Operator

Your next David question Duley. is coming from

line live. Your is

David Duley

of follow ups. question. just have them Thanks taking Most a my for have but already couple been Yeah. of asked, I’ll

basis? You quarter on mentioned for Q seasonality March what -- the the current March seasonality, quarter is Typically, the the historical seasonality. quarter

Mike Dodson

digits, I’d say, single mid-to-high the ranged quarter-over-quarter. it from decrease

David Duley

or won’t to will sure that you when why products to lot hardware think that I’m way do -- about let’s think What won’t is. I pieces five-year transfer. software a to ask know transitioning say, of three-year actually model? over you software a And it transition all period there’s that And percentage ultimately, some you your of that a them? Okay.

just period an transfer five-year three-year trying get idea software-oriented would model? this to I’m you to a to to So over what expect

Mike Dodson

XX% be revenue. to when as characterized of On we five-year XX%. it’s three-year is as Yeah. we total That recurring we Day our non-product. model, plus would did our Analyst transition. What minus or Today, revenue our

that remain, numbers. product that So of the half we’re will of XX% it round software to today, move is half will and looking at, really

David Duley

the bigger in where top XXXX. am bigger XX just other you slide incremental How top presentation, have that a in of markets are and And you tier on hyperscalers wondering do how view there scale couple a then the than pyramid slide have Okay. the much Fortune then hyperscalers. top opportunities. web you the of guys much I your those

of… understand trying sort to Just what

Jamie Lerner

Yeah.

David Duley

two …market with big opportunity pieces. these have you here new

Jamie Lerner

business happy go an size your difference I in to little technology software, other -- tech by in and all hyperscaler when web view between and to enterprise, mean don’t to more scale to they characterize problem they that’s as business value they’re by as use use the and value. And third-parties model. them. and And would to they’re happy But they your that model. that dependence the as is to way. think, company in possible a I I themselves less happy or on a -- that work a They’re services, mean, they’re those to technical wants deliver you with help and you what happy don’t companies tiers feel I for their design wants their

deals of of of so and much, there so margins, two is the percentage those -- and may And much much percentage while the smaller, the be software services the profitability the drastically larger. is pieces lower higher

-- tiers. be wise not over we the it company, from that be any the double get bigger lower may may So to could dollar be margins but hyperscalers two in it those

David Duley

Okay. you. Thank

Jamie Lerner

Okay. Thanks, Dave.

Operator

further There questions to turn are at no this back would Jamie for now time. remarks. to I like closing it

Jamie Lerner

right. a Well, was It thanks, everyone. great All quarter.

to updated we’ll to forward as more our software, transform rich looking services we everyone as profitable, as to as move company earnings transition and on keep We’re more we more can and ourselves subscriptions. transformation a we into quarters quickly

thanks, soon. So, be we’ll talking and everyone,

Operator

and participation, gentlemen. ladies your you for Thank

may You disconnect. now

Quantum (QMCO) 28 Jan 212021 Q3 Earnings call transcript