QMCO - Earnings call transcript Q4 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 Fourth Quarter and Full Year Results for Fiscal Year 2021. At this time all participants are in a listen-only mode. [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

Good afternoon and thank you for joining today’s conference call to discuss Quantum’s fourth quarter and full year fiscal 2021 financial results. of Quantum’s President relations Sievers, Leanne Shelton investor Group, firm. I’m

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

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

press reconciliations management Additionally, and which Included the during GAAP and will financial provide release company’s in certain conference discussions of release measures non-GAAP this to of in call statements GAAP items, press definitions additional the information and terms. are non-GAAP company’s include and details.

at time, to those recording the For will a listen Quantum’s of this be the at entire Relations available days you unable in of call website. to Investor for least section XX

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

Jamie Lerner

guidance. demonstrating Strong our third material and on subscription quarter for bookings year early you, a our we Earlier results both finish allowing share year traction earnings fiscal Leanne. exceeding per our orders, And all contracts. with in for increase today’s with customer to consecutive call. announced Thank us fourth of increasing demand while the joining software and net today adjusted XXXX quarter to led on thank us you our and income

in exceed As our fulfill have announced to Without revenue all ability customer release, our impacted shortages would the challenges our these able to we industry-wide been supply earnings chain in late orders. quarter, press prior the guidance. we

first the fiscal entering significant with are we dynamic, backlog. quarter a this Given

from with to pandemic. on around services. set for working remain made Yet solving selling to products significant we progress the challenges We business through we strong to with are posed numerous manage and the Fiscal of transition closely progress in suppliers challenges notable and demand broader companies customer made to temporary due transforming globe a Quantum. year XXXX solutions expect shortages. We our these our point

a number year. closed customers we deals XXXX, buy the versus $XXX,XXX During prior saw of plus more fiscal and services new record

many we completed to addition, over an expense. XXX million now November interest secondary offering accretive in reduce the strengthening revenues $XXX secured products customers loan have we cash sheet our introduced on using in and for of and subscription. our position our and subscription proceeds term February, materially by reducing Also, licensing our senior balance earlier In XX% the recurring while

testing. year, file Proving architecturally. tremendous is system we fastest Over for progress through the past video the verified StorNext have independent X made this workloads also

During standardized defined or the software enabling StorNext architecture, quarter, our any hardware, to run infrastructure. software we on cloud introduced

hyperscaler We’re entering business. the fiscal year momentum our in more with

customers, many engagements of across As hyperscale in of have we evaluation various with major are others. world’s the and today, multiple of stages

engagement just solution software deeper needs. point than is or serving Our product

And integrated become an the us competition solutions ahead we the As global customers, architectural cold standard in have and new develop with teams Quantum’s and storage. the data. to tandem of to allowing years hyperscale, deep largest of in partner these archive in hyperscaler are this for engineering Quantum set space. consumers has leadership technologies

customers of challenges. visibility out be chain architectural that provide innovation as constantly new through their as Webscale, solutions and our can are leading industry-wide to Fortune for us We see exabyte leading constraints. the this enterprise our an to only hyperscale but replicated Quantum which push demand advantage with exciting working better into data not leadership, increased to accelerate scale quarter XXX an hyperscale customers same volume allows technology, orders, Our with expand supply to customers as create as of engagement facing demonstrating work software with and well the us we

sports, Video Movies, big for life the satellite massive as satellite content and in are growth technology platform economy mode video has large is theaters to video and communications driving streaming the accelerating. television mode. the effective advanced era, television strong delivery driven and return sciences with storage therapeutics also recording, requirements. enterprise editing Space in expansion of size driving an and shifts along requiring corporate exploration, from customer and As services. in and COVID-XX research is a tech email investments as moves by into dynamics to communication Genomic demand and overtaking data is bioinformatics. have vaccines development begun growth expanded post-pandemic and in is

more complex delivery, used Finally, as forklifts, but the these are moves data growth machine warehouses, develop technologies to toward a learning models. farming, mining, not autonomous everything, significant just world driving driving,

As we data suited portfolio all these experience ideally managed, on an amounts video Quantum’s must that of the and be analyzed. everyday basis, is address is enormous to challenges. generating content protected and world

manage to store organizations in increased flow both of on-premise enable cloud. the solutions Our the and data and

centuries, but and to analytics storage to protect helping in assets, data and We’re while decades unlock to value our data organizations not just this for untapped years, potential solutions. and enabling valuable business digitalize the

and As revenue. focused coming growing our transformational on look initiatives quarters, the we to and recurring we revenue forward our remain services driving

and products most global helping solve software long-term data Our their needs challenging are analytics. customers storage solutions for and

we near supplies our fulfill in all While demand the are have the seeing to ability term. limited shortages

year accelerating CFO like expect that, coming catch past We into demand. to and flow we’ve I I’d this forward remain component encouraged to With to to the the progress transformation Dodson quarters fiscal over turn throughout financials. discuss revenue XXXX. is the our our the over supply able Mike? to the to Mike by the call further as look to the and chain up manufacturing normalizes made

Mike Dodson

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

demand As XXXX consecutive customer third customer to demand, quarter our representing increase demonstrated very Jamie the strong mentioned pre-COVID in fiscal bookings, his opening levels. fourth with returning in comments,

However, that the late materialized quarter ability to industry-wide all in our fulfill supply chain restricted the shortages orders.

supply this have declined As fiscal customers. the to secondary predominantly level, of for a Despite all shortages quarter business. of sequentially, XXXX. supply chain the fourth revenue the which the was due sequentially lower our government constraints, in seasonality These of impact product prominent our system revenue grew with systems, result storage these segments on $XX.X million most exception primary storage

impacting primarily For $XXX.X down COVID-related XXXX, a year all product full the of increased government On XX%. lines. the revenues year vertical business fiscal view geographies the and year-over-year, million reflecting XX.X% year-over-year, by headwinds were

margins. year. offset While quarter in fourth by the in was fiscal due million, footprint, which sequential and spending cost in and entertainment to primarily The The sales in expenses increased extent. with to cost fiscal of to to fiscal increase share investment the in offset $XXX.X $XX reduction sequentially. the a moved The non-GAAP IT discretionary Year-over-year $X.XX and costs million to as lower headcount marketing, the On government to to expenses, our decreases in by $X.X million general quarter acquisition, other of compensation $X.X prior the changes basis, and due a to operating to existing prior in physical lower development, expenses decrease XX.X% is $XX.X carry lesser marketing versus offset our declined prior to decrease compared we sequential new in prior fourth a a $XXX.X business was and year. was in research and primarily $X.X costs the million. services administrative and spending we verticals expenses loss in software programs were lower was non-GAAP professional fiscal GAAP due decrease declining research The gross fiscal sales result XX.X% regions back to margin sales improved quarter expense expenses more compared and R&D $XX.X expense year fourth primarily year-over-year million costs decline lower general operating higher more GAAP administrative is of was expense decrease consolidate due margin to functions loss of or reduce to share, in per and all net a prior were compared gross compared quarter. infrastructure. by quarter. $XXX.X levels, The costs. to and primarily Gross or year-over-year $X.XX XXXX operating expenses. loss and increases million $XXX.X a higher quarter. The the in at million operating decrease and revenues, costs. primarily the XX.X% development a than prior facilities business primarily media related to a administrative XX%, cost The in in was quarter in in of fourth and decrease office to and expenses G&A product million than a reduced additional non-GAAP million actions, related in XX.X% year as compared The the million, costs professional due which related a marketing as decrease region of levels modernize in represent lower certain net per general by were is in $XX.X other partially development. expenses the a loss we savings. operating in compensation services GAAP million, during higher Non-GAAP slightly expenses operating business

quarter Our $XX.X extinguishment of fourth of GAAP related senior of included to term loan. million retirement secured the XX% charge results debt our

a the adjusted fiscal prior of Excluding during in the measure restructuring non-recurring charges, most adjusted directly primarily was million and $X.X $X.X the in $X.XX quarter. stock reconciliation or released net or fourth was compensation, the press million Form non-GAAP the net EBITDA a There’s to non-GAAP charges the quarter $X.X revenue. fiscal fourth per income share, full and on compared comparable sequential to breakeven Adjusted due today. GAAP million income $XX,XXX both quarter basis for of lower in our release from and XX-K decrease results

million $XX.X partner $XX.X the more shipping remains Outstanding at a and current loaded balances moving lower of to More primarily on of after compares covenants as a decrease to that fiscal as from to the $XXX.X XX, XX, to the current XXXX, was deferred on net $XX.X XX, was and balances by million debt $XXX.X for December debt schedule cash netting a the quarter. cash manufacturing was $X.X and working carries product million $XX.X balances million long-term XXXX. debt quarter were liquidity in Adjusted These December include million Cash in manufacturing during in result certain netting due of a portion million there of it million flows. a to and of XXXX. under build of compared accounts $XX.X turning on million restricted fiscal by revenues a million June $XX.X basis, quarter. for that on sheet, XXXX, the receivable, for million prior new revenue $X issuance facilities decreased credit million March XXXX, an the certain in $X.X than debt credit unamortized of related agreements. $XX.X offset as and long-term This basis accounts inventory a the fourth basis million inventory balance million equivalents to excluding term $X.X Related This cash long-term of financial unamortized in debt end gross XX, the Now, was capital, reduce payable. despite XX, backend after $XXX.X holiday on of and and portion costs issuance debt. outstanding basis, increase debt. through million costs period a a in March gross net to

call expiration of debt expensive the may the XXXX. repayment first of at the of the fiscal term Following agreement, end quarter the of

$X We the balance drawn expect as at second much XX% quarter. to credit more to XX% fiscal completed. further should interest of much fiscal refinance In at end prior paid compared annualized favorable the early today. secured once the compared the of This rates term on the by funds to reduce remaining there expense the million line, senior our quarter fourth quarter, in no were loan, the company’s as our

from of cash the fourth and to as quarter, of fourth of cash $X.X $XX.X as XXXX capital generated in before before term generated senior the During for by in was during million capital in the our operations million working increase our pay year pay senior uses of were down capital assets the by $X.X as used effect the million was include cash operating accounts. Other changes Cash an $XX.X XXXX cash included a of secured million, of half expenditures. $X.X uses fiscal well from for quarter offset accounts term liabilities by decrease effect offset an in changes cash previously changes million accounts assets [ph] liabilities, million was loan, in working and down to increase in fiscal secured year million. by partially Other in payable, of expenditures, as and $X.X receivable. notable inventories noted. cash fiscal impacted activities XXXX loan $X.X in use in equal in of capital Net flows

our to financial Finally, turning outlook.

demand As we’ve we broad release, we fiscal first quarters strengthened demand. three customer related of orders press customer above and levels of the And increasing disclosed experienced in today’s quarter or pre-COVID continued based at in XXXX. expect

supply widespread fiscal in we sizeable fourth enter quarter quarter, first a the of shortages the backlog. chain the Given with XXXX

address manage chain working short-term continue suppliers to extending challenges. these with and closely by as our We these supply key constraints commitments we supply

of per loss guiding minus are in Non-GAAP opportunities be or of demand the million first million. constraints, As or expanding or adjusted expect net fiscal of is fiscal of business. these to $XX the Despite supported minus quarter plus minus share million. $X.XX, and adjusted million to further million, coming plus be million a expected result, loss supply $X $X.XX adjusted $X we plus for an revenue strong net $X we XXXX $X throughout pipeline chain $X share, minus EBITDA the per range to or across plus by near-term our with year, of continue

to I as chain, mentioned. continue closely with we previously normalization our as to work the key cautious of regarding remain timing suppliers, we the supply Although, the

for As range the the to the that, Jamie? such, Jamie million be of closing of chain a XXXX call supply comments. for to fiscal determined revenue we year $XXX I’ll back full With to timing improvements. expect by $XXX turn million in

Jamie Lerner

Thanks, Mike.

on team the proud reflect far Quantum very how we’ve of I the last come. for I’m As year,

throughout on we And these has our progress challenges have everyone, substantial pandemic. challenges from the want transformation year whom on the and initiatives I during families, still Quantum. are our the unique year. But employees of the many a including in face pandemic, during It even their of for brought global demonstrated making have exceptional year. incredible resilience been We this to last acknowledge faced

addition, our made support enabled initiatives, us improve fiscal improvements to we to XXXX, our reduce inorganically. and which structure, position significant during the In strengthen capital cash our on debt, organically and both our growth flexibility operating

and starting year the are software We bookings, strong contracts. product and fiscal subscription momentum increasing new and with

the we balance the address to a suppliers of solutions of With level a our pleased solid in constraints, across with poised much growth And now than in remain return position these an sheet supply for are we post-pandemic are but seeing a and demand, expanded closely with working portfolio We’re take increased chain demand supply with disruptions. you and withstand have. any may business. With our questions to years better are previous Operator? we’ll that, orders we to increasing world. short-term

Operator

Thank you. [Operator coming Instructions] Riley Craig Securities]. Your from first question Ellis is [B.

Your line is live.

Craig Ellis

to profile taking back at Jamie start wanted spoke Yes, the component thanks for demand Mike, levels. of just that the understanding off congratulations by and the I And the issues guys. nature to. on you pre-COVID question,

you emerge and But started seen or provide more business in was you on some to were HDDs like on they can there what So tightness we’ve sound said one, I that SSDs. late HDD the you quarter, doesn’t they identified that and secondary of impact color components an think SSD.

could extent at what’s as you and maybe well that And if just So, on would further, color either get stabilizing as or intensifying on to to starting those better issues give start some are which that play more there? a issue? help the

Mike Dodson

Well, It’s lot silicon. on like it’s the we tape really like to Craig. business, into specifics we was a was, is really, lead get don’t our It of mentioned suppliers, as That pretty area, in call. specialized the right. the is but it as time. far short which Sure, a secondary us. for And,

at So to two in end out, really, or that it really time. next we the From it’s standpoint, one way of we’ll its this expect, hopefully difficult the But tell at something surprised quarters. quarter. us work the it’s

Craig Ellis

with XXXX the for the $XXX of that so get end. to range first that to on quarter fiscal off then million at low color the the nice fiscal to at second you’re $XXX question, really And million looking guidance the Okay. how relates of

a $XX could the high at that something million quarter like think imply end. I

the backlog As seems quarter, the any do is least that shaking have million million can provide quickly chain supply how much out quickly services? as you amongst you color that to $XXX to It can think business on demand maybe the a and can that’s level profile things respond demand like, resolved. but secondary the $XXX or nice high how business, at you either the a primary how million, has business get $XXX

Mike Dodson

come it’d be we’ll back It’s way supply got And when component. the a that very It’s Yes, that, to in quickly. demand. a to it I characterize the catch think the it up very get start We we get of, matter will we’ve nature. fair of back, quickly.

Jamie Lerner

it’s The Yes. been Hey, and have $XXX for Jamie. million Craig, the about about is, when way we the million to range thinking Mike I it of year. $XXX think

We’re million orders of signed the meet $XXX at level. or sales the million factor or purchase $XXX have $XXX confident, material performance million the or demand a demand of we $XXX function And land availability. a is determining and to where not million is above the contracts, of purely have the we’ll above, the between we’re function

We’ve we XX is because year sell ship which we backlog guidance, then within all within it the So the of flows many backlog through. usually of if I If range. materials at that think industry-wide resolve themselves, which are high thinking, companies, materials our available, never if resolved when the months, are are end weeks. lower range. these we’re not And two we’re end the something, the people at we’ll fiscal available, given issues supply within

we’re backlogs constraints the flow that year never and XX% ability XX% going the flow will are, seeing will backlog backlog. a now and of sizable year? for the really quarter And in And function nature. through supply backlog that is it’s becoming of So, within to to our had chain through resolved we’ve now the into of a really, any

Craig Ellis

if helpful, could really queue. and more jumping back Jamie, the in before one that’s ask Yes, I

that’s version you product is What of resonating services. there umbrella you how subscription customers get or developments? out You have on segue are I doing? just the StorNext to got back, to access with signed And mentioned, feedback it more a XXX I that some of new have wanted that you’ve X any the was CatDV they the have Quantum as hearing think up for other customers How and can now latest use product that that are refreshed recently under the clients? to

Jamie Lerner

basically and we new Every have version have portfolio. refreshed entirely has Yes, a out. we product

it it have made with So easier We now X, HXXXX. to containerized StorNext virtualized drastically we’ve use. and on

architecture. a effectively it’s So cloud

writing So, it record in and on point subscription. for from that now a the products set well. other products backup And monitorable return the available it and a the clouds. autonomous speed a It’s with with because run coupled bought the sold the of cloud. strength other many and suite vehicles, And on files. product, entertainment, worldwide you video and really It’s media manageable And can the or Amazon as brings research, Quantum you we for we’re doing it selling where years or genomic product. products increasingly, bought tape products, reading

than sitting and more analytics portfolio class storage where someone we’re our our think whole competition And all products. point we we how they saying, over you performance a high storage with several to bring forward. we’re the of solve different suite really really your we’re to saying our and customers help with surveillance to of next years and Now, related, totally competing I going that’s related, company move want the backup problems, really be related, sitting with our whether

high CatDV from just have that to StorNext attach a that’s we strengthens rate CatDV. So right

to We them selling products and products of a as single backup StorNext tape have we’re designing rate combination to high a sell products. products and StorNext from point of a our to attach increasingly products. suite And versus or

Craig Ellis

That’s hop in the helpful. queue. Thanks, really I’ll guys. back

Operator

from coming Co]. [Oppenheimer George is & question Iwanyc next Your

Your live. line is

George Iwanyc

and to customer there’s the price, room motion, from a are far grow product I you – how breath about solution us feel then maybe the up deals the with like All to average up of, nice you in seen large lot your give a I’ve selling a previous questions. sales already selling And base? can right, think shift sense are continue along thank following for was of to taking you you step selling? overall my Jamie, both year-over-year, you of on just comments XX% that

Jamie Lerner

I for there’s we’re And large really, a shipping solution combinations. as amount what increasingly us. I feel Yes, is doing we’re our products mean. of headroom

So virtualized a we fashion. a of that product have is and a together well, StorNext, they’re a combination that is, good forthcoming bundled example in CatDV

products storage that using be We storage will object have cold technologies. upcoming

So, products solve combining problem. multiple together to business a

So, it doing do of we’ll Think solution. making So, genomic be genomics many sequencing infrastructure that vehicle many want? more kind. a of as infrastructure, development solutions. autonomous versus how a solutions and infrastructure, A movie more storage doing you terabytes we’re of

more related have increase I point just selling a many of surveillance well. a much it that with come compete average allows us our as us think doing We We’re competitors position. more we allows full solutions product. just effectively, a stronger have to forward And solution. And price, to

more So, competitive. I getting think much we’re

this And think with above that’s And above getting range, we’re, where they is our by up team, the through. think guidance plan we all I And more But really quarter, I’m previously above I most, it backlog. think products material guidance why what by sold. our are which were clears customers. the the meaningful are availability, levels. well and we’re sold we building selling were flows the in in eventually as the and know, selling throttled than we happening. beating that’s I sales sales range our – they gave they much And point stickier last relevant sell the accelerators, team situation solutions are we encouraged

above size Asia I think approach. all isn’t average A is isn’t larger know, and we But COVID of the or us selling lot recovery. of that the of products fully solution fully pre-COVID of add Some levels at being recovered. is Europe increased our the relevance recovered,

George Iwanyc

a maybe that? there? lever and positive that the get of guidance? What bit – business can that of Thank XX How focusing you big your you within storage. type let’s annual Is are the much on just say, little think And is you next primary over months? for that. And how the do the pivoting rates attach seeing

Jamie Lerner

a forward of relevant mean, primary success are Yes, storage I strength. core and our lot is our outside success traditional of becoming

considered be I and industry the to have market, we think standard lot a end or is And post-production market. high certainly movies television. that for that in of StorNext of the

take media our are into more use traditionally cases and we’re go. making enabled, it’ll traction does and cloud us us forms entertainment. to we become cases that autonomous some the product really we And for to have medical way imaging, outside That lot take of use of use corporate terms cases, genomic to easier, of competitors. to relevant sell new be Particularly, really expand, get primary and entertainment. corporate the in our So to we sizes. a I we’ve long there development, unstructured ATFS, elsewhere. media than which where products seeing is would getting have see sequencing, And into a data. vehicle StorNext making more think But other of we defined positive enterprise software into begin growth video, But begin have served there. that’s and bring us different as I in think we and our and us more but get And products, them can are roadmaps

can be markets? about it’s in relevant So really vertical we new

George Iwanyc

for of quick outlook kind constraints, quarter, you And quarters? us the give the margin like biggest sense can a on the over couple for margin the you mix question sounds next just supply with a gross for risk reward gross had Mike but side, a impact the it the on chain

Mike Dodson

our important. gross mix the is look Yes, at I we when margins, think

the is for get Obviously, our move QX where example, into which government we we as subscription. that’s QX software the and a that is when So, better quarters, strong, beneficial to will margin. be

move that standpoint. move margin having gradual. do see see the to on But shortages the going gross our forward. as significant to that impact see, the be So from expect we transformation, we to north don’t we that we supply margins And a it’s

George Iwanyc

you. Thank

Mike Dodson

Okay.

Operator

is next from [Northland Chokshi Markets]. Your question Capital coming Nehal

live. is line Your

Nehal Chokshi

at Thank order And I the an to flow a great. book you, drawdown and actually a free increase. and inventory generation do congrats on seeing quarter see in continue quarter. with in and a levels, strong to pre-COVID That’s book consistent for cash

sense. saw so explanation that components make And you orders definitely the

inventory a want about ago However, queue set million one clarify above $XX day’s year little here, [ph] had to was brochure levels. days. March And XX your heading into

So it Can least seems here? the you this link for like inventory at explain, had you guys some missing have would buffer what’s just quarter.

Jamie Lerner

there’s call. versus offsetting the factors have I talked Yes, on we it about think

to have a moved inventory, sheet off manufacturer. We the balance contract

that that our these So was shortages, because component shortage. inventory. reduced it’s Offsetting with a

components have manufactured full be We these to units added. Right. essentially for waiting

offsetting was there that factors. So

Nehal Chokshi

And components inventory goods? that that then? was was manufacturer was finished moved to the Or that contract

Jamie Lerner

goods. It would have been finished

Nehal Chokshi

It goods. was finished

Okay.

Jamie Lerner

I I who would but ship building liken some it automobile they’re cars, full makers guess, chips. missing to because them can’t are

building components didn’t chips arrive. we last We’re small just the tape and fold need arrays need the we

So for components ship that’s them. to those waiting

may waiting supply up and it we’re full be to be that’s them. inventory be building ship, building to able counterintuitive to but ship units on final to they’re constrained, but So a component

Nehal Chokshi

basics something basically These it’s else? the the the if behind takeaways or or controller’s

Jamie Lerner

the rather operation are I’d not, predominately the of which suppliers chips system. get that integral of the into and tape but what, are suppliers they to

specific a are we’re it’s short-term why this seeing because it, very before folks and product. that’s it’s seeing maybe So other very tape

very and to chain supply So it us hits in short comes a cycle.

Nehal Chokshi

in the fall your typically By Yep. is Understood. Gotcha. way XX-K? backlog

Jamie Lerner

two No. we later. or sell like week ship a I always, We’ve and said,

was more So, clarity. more the plus provide gave first we And we’ve if continues, that point, or again, of or go this million. for time it for never quarter significant guidance we’ll run minus $X backlogs. I backlog But really we backlog and million would this have a now had to $XX probably And significant.

of So the high range the was… end

Mike Dodson

$XXX million.

Jamie Lerner

sales dollars $XXX execution. above million. We of millions were our in that

about, sales encouraged are right. what that’s I’m we So, achievement. in our most beating And range

executing. We’re

deals some supply hope constraint and these this. to our resonating. short-term the I What deal products done, we’ve is We’re got And getting specialized tape chips are a for with in of systems.

Nehal Chokshi

Okay. it quarter demand to are Great. backlog you levels, pre-COVID would you then and providing, June would guidance the And expect, that well. that like sounds to given you above that as increase the be expect commentary expect you into

Mike Dodson

Yes, slightly. Yes.

Jamie Lerner

Yes. backlog. probably If want, be what you building doesn’t clear supply we’ll

Mike Dodson

Yes.

Nehal Chokshi

how with on customer’s give quarter. to percent that you the little nice then And overall now this made transactions compares you’ve prior of context also software in that customer great. quarter? that the and on subscription Okay, overall, the maybe were maybe then metric customers presented And Can a represents? base given some

Jamie Lerner

meaningful, have, zero. right? XX,XXX December, we percentage, still I mean, zero, it’s incredibly mean, not I but customers, growing Yes, fast, XX,XXX, had in XXX a are we nearly so over it’s as

So, we moving are of over a pretty time direction short period quickly. this

we’ll I moving think to And more this our increase products at pace. be model. it’ll this continue to of

our everything model. this the comp customers our wave, service, more our is plan moving or sellers and that subscription, all forward to did we recurring to going service new And a economics based more that product year incentivizing So, even of our push to entire to increasingly for first or to go waiting model. new there them are our end introductions, is but

over to continue I zero XXXX. So, I four to expected from up. the to just that’ll go year months, We accelerate. half went think XXX. and well to and at a And I exit hope

Nehal Chokshi

you very much. Thank Fantastic.

Jamie Lerner

Yes.

Operator

from coming is Mattiacci Nick question [Craig-Hallum Capital Your next Group].

is live. line Your

Nick Mattiacci

on are demand you for the is on what year? the I’m or the guess, Mattiacci if Nick is about taking question just the this royalty past strong then questions. for business. pent-up curious your a to LTO-X. Chad for rollout about this demand generation could for the just perspective timeline I for revenue our any on had Thanks royalty prior maybe, of this for I is And new Bennett. And year, relative if generations? you seeing talk still expectations Hi,

Jamie Lerner

how kind cover Mike the in to the talk royalty. expect when can is available. modeled LTO-X I’ll up a surge and do Yes, the we’ve demand I roadmap of

there LTO-X. incentive go but LTO-X, a lot running in of to that don’t have MX to a an of think people LTO-X lot upgrade are incentive format to have to I

that supposed of haven’t architecture. a early move refresh either right customers now to release. to otherwise I be So, and heard is And or a lot that I upgrade would expect that is fall to

demand I expect would and the generations royalty newer that drive to So, increase as obviously well.

could signal demand they now they have are achieve. – greatest want that that giving imagine be do I for you going that we the waiting density they and that So customers they to us really drawing can and heavily that on are possibly hyperscalers, are

as of to can as moving you be possible. that imagine to are quickly lot a people going So,

the positive it’s library think business. I So, for

now royalty. is refreshes October a, positive it’s for It But in for it’s release think positive it’s on everything timeframe. upgrades. running September, And I I settling the and think is heard late. I’ve

Mike Dodson

our running Yes, that is And right now expect rate would five and lower this expectation, run to in quarter. I pretty as and constant coming year. per far as year. previous our bit four mean, a little between And we was it’s than remain the it

out. you where be should coming that’s, So

Nick Mattiacci

you. Thank it. Got

Mike Dodson

Thanks.

Operator

Martinuzzi coming Your Markets]. next Eric Street question [Lake is from Capital

Your alive. line is

Eric Martinuzzi

things that course when chain you’re things, on being week, management normal you I supply day. there out extra a a changed grip tighter question checking winds in had disruption the or once the changed on up from typically to problem? just report a as got the that perspective, get Anything a of a as you’re you’ve an far you there a once issues, now level scrutiny of

Jamie Lerner

supplier, talk all, of where the to problem we first know exactly daily. is. Yes, that do We

have years. for XX supply Our chains and are deeply deeply integrated been integrated over

There we’re because talking we’re specialized world for equipment. we’re a pretty of a is specialized talking the it. intimate of with here; us about several commodity only that make. servers This So, this, item about not chipset in very not

not this lots alternative suppliers. very like in And can or there it’s quickly. So chip make foundry you of another aren’t

we we are all So, beating are methods. alternative I the bushes mean, in –

buying We are vendors. at allocation possible, from gray open market we’re allocation, it’s other to looking buying allocation, if

this terms actually as I one are people it in flying putting we And experts suppliers. hard mean, I grinding we to at of sit on So, can. think the as

we and people to have factories actually in help. how can see sitting fabs We certain

down think just up this I every So, in is we’re about swimming way one, that helpful. and

This has we for completely. think and problem been XX this our I years. wheelhouse understand deeply

months. six last could this really have is I year. I a to do seen one one through this last longer will not we scenario this chip work believe not don’t else. resolve where and And chain. this it So than just I XX we to think I supply But six And I This think the we issues have longer like it’s will don’t understand. buy than from someone to the XX within and months, is

Eric Martinuzzi

you which as satisfying to into into they far turn your or finish then to to Are goods. do in customers? are turn units these as, finished you access are certain orders prioritizing them get you components And of the order received as

Jamie Lerner

allocation We’re on based managing economics. our

Eric Martinuzzi

Okay.

Jamie Lerner

margin highest customers Right, get allocation first.

And solid orders with to the allocation best going economics first. receive are

Eric Martinuzzi

the as order This hyperscalers. where as, talk logic I the got on did there. you understand we’ve was plural from then And far hyperscalers.

who with here your here had with side we the hyperscaler in have issues place working chain reputation Any the phase. to damage issue more hyperscalers orders on have design or any supply the [ph]? brand sympathetic We’re supply Do customers in the a issues? or

Jamie Lerner

No.

shortage. I recognize a have a it as source they they think the full in is item. understand a visibility in And Quantum And is the supplier. they of that think downstream – It’s related to from I that.

They’re think hyperscaler I cranking So, sympathetic. they’re their because customers up. orders frustrated, our are

need almost I – And every from out demand they’re I increased has running They’re to saying and almost buy They’re them. buying hyperscaler they more. us. think their and affects of we have signal it more this with us. cloud,

things or regularly. concerned, aren’t not there’s we that commodity so those they’re they’re meet them think And with But I because lines, anything it’s brand – these components. along damage don’t

signal. We’re for giving asking them them very demand clear we’re

very them reset providing in the And clear margins. expectations. allowing terms some cases to allocation of table We’re in us it’s

Eric Martinuzzi

there to mentioned, kind It media of ability of then last don’t a a sounded that’s of for address versus demanding January this the product their do I of And of know is whether this question a Okay. business, to or media and the them conduct entertainment. you with, to compared you year? them for little comeback. like – from to kind reopening Quantum. bit entertainment me has reopening and Could

Jamie Lerner

for there’s demand – movies. more just there’s Yes,

heated a on can it’s content game production, opening more see the on movie game streaming, it’s are And back for sports, wars it’s television there’s people making. up. for on for Now, game theatrical,

lot CatDV. I to So, media I to to grow pre-COVID get there we’re think, business, start a think StorNext a We levels. getting more in go other to not levels probably there. that to pre-COVID we’re really we’re lot above And to with recovered returning attached going But need more moving we rate and our entertainment. markets, grow business

that going less into markets. are niche We’re to start bigger branching markets

Eric Martinuzzi

Okay. my All right, questions. luck thanks in And for QX. taking good

Jamie Lerner

Thank you, Eric.

Operator

question is [indiscernible]. next coming Your from

Your line is live.

Unidentified Analyst

a to of bookings to how most what a of growth Appreciate Thanks. generate one question. want sort as thanks, like year? need follow a taking drivers the you here, sort you guys. important do Hey, up that things the And quick after would bit little then the describe have from you well. you the feel I some them? bigger for picture of Jamie you of the do go this and them And are

Jamie Lerner

motions, Yes, about the I refreshed whole are both and our We’ve big technical motions, think technical as new well all as motions, product architecture solutions. selling portfolio.

new But StorNext, products, DXi, and So, products, product, doing the that the we’re a ATFS those CatDV Scalar what of is we last now did our brand one point our year. tape – refresh. in every product,

solutions solutions, those it’s And what cloud. suites makers. the for hybrid as cloud. more that are of this motion year, combining moving the what on architectural in to on-premise solution both just of and nature, the more selling do and bundling being that, vehicle accelerate. Now, and operate those doing year and work that genomic in two of movie a those in the into they solutions the that and of big we’re really and selling company we products, on-premise continues products and I specific them think products sequencers, suite And for to this to And moves, solutions, we’re execute is makers, working of for and autonomous a is

Unidentified Analyst

take into them technical action they That’s pretty super going helpful. you to are the bundles? or from products And sophisticated, Are those point what straightforward?

Jamie Lerner

think two items we have that there’s I achieve. Well, to

begin to It’s itself build product by to teams communicate. first work The easy cultural you have siloed is those organize a solutions, company very for together a But when product. item. to

working that is, solving of business teams we combine together So business about it think our lot a run it’s are now and how problems, products. product

not And other a our do parts. So understanding the working some it’s that the greater Right? lot storage we’re a just than deeper much is one. step technical different system. combination that is the a of step combine the two is building we And solving. is issues, a of way of products problem We’re how

a genomic helping sequencer. We’re

just features. not We’re creating storage

a helping helping or go Mars, We’re right. to movie, someone make NASA

how And leaders lots think and how we, collaborate. they’re organized lead adding they about the versus of team, team changes really a to our and business organize it’s and problem as that features. solving technical So we

becoming And goals it’s with are working a how big of our solve mindset goals leadership, a with build and all change an us. for our to are, technical really we about and with problems. customers and really sell. business it’s our it and less So, goals, starts kind more approach And feature what

Unidentified Analyst

detail. quick Yes, that’s I follow the that. just really now, helpful. appreciate Thanks And helpful. up for That’s here.

the On And bad the it. of the you a it supply there? could be how visibility on constraints, given handle do tree, jump? how have – specificity what’s component feel Appreciate you the Thanks. like constraint

Jamie Lerner

Yes, I mean, we been given. have minimum volumes we’ve

lower go given And we strong the into commitments So, what is. levels. it And guide. we’ve know that been certain think we’ve packed will mark I that low not our than

I the So, mark. low we understand think

And so our are that. are a above that suppliers bit meeting far,

only improve. – isn’t comfortable that we But we feel these unstable. not getting materials weekly. we’re it’s to we’re think want. was pretty where we model a I what And they us can in So, committed It receive basically can what it

lower levels. won’t it lower. that any at stable it’s think they’ve go And I committed

think volatile. low. it’s It’s So don’t to extent, that consistently I just

Unidentified Analyst

That Got so much. it. really helps. Thanks That’s helpful.

Jamie Lerner

Thanks.

Operator

is Your David from coming Duley next Securities]. [Steelhead question

live. is line Your

David Duley

for my Thanks Thanks. Yes. taking question.

Just a clarification.

or million I in had did or that hit would of current constraints like have you levels revenue without million? would the shipped you higher my levels supply $XX think phone the with would say you technical – have hit pre-COVID $XXX quarter. the have I can’t mentioned difficulties, some you you had that you would much

Jamie Lerner

$X $XXX above million that in minus said in those more the quarter, say We execution so plus executed pre-COVID above sales this of million mean levels. would range, pre-COVID sales I Yes, end or million, the were numbers. that range, for at high the $XX back we

David Duley

without and both quarter, March greater the than million something so been $XXX have the supply would that? doing constraints or June in Yes,

Jamie Lerner

we but high, that not $XXX were million. Maybe above

David Duley

clarification. you for the Thank Okay.

seeing, closer they that get their constraints supply sales? this and is So, the hyperscale given enterprise essentially the don’t bringing you and planning? into constraints in your future you’re surprised customers large your longer from Now, from that getting you visibility like, are

Jamie Lerner

we’re large people I we to one get – playing mean, try to good, think is seeing abnormally orders Yes, not placing thing, feel supply. I just and

two not seeing like greater seeing and abnormally orders in received giving weeks. quarters, for order are orders. a us it an we’re time you or us people So, double into gave large view multiple But we long you

but people we So, of to weren’t a really conditioned visibility not supply only pretty it’s are give constrained because industry lot us whole wide. now,

giving giving I us some our our full bigger of think we’re signal. getting are customers full several and particularly much better behavior them larger us, where quarters, our customers are demand customers, XX year, months

attempt the behind get giving queue. demand signal orders in an XX it And months the some us and them of in are purchase to

POs, not down people not think they’re just POs they’re a So, are reasonable on visibility better numbers to just the are supply. putting seeing up POs, giving large us and are signal, and and with I hold backing signal the we try what

better So, we are getting demand planning.

David Duley

But your for visibility ever is forcing you’ve the products. want So, have the products you assortment new them and current environment lay Right? you cards basically reasons, and of had an than large customers before. is fact right, longer much their give to down

Jamie Lerner

I think that’s a fair statement.

David Duley

Okay, thank you.

Jamie Lerner

right. All you. Thank

Operator

Securities]. is Craig question Riley coming from next [B. Your Ellis

live. is line Your

Craig Ellis

the yep, follow-up. – taking for Thanks thanks taking for

but gen LTO inside closer of comments that time, that I a fourth the think either ones. maybe fiscal September, If first that call, coming to October be went timeframe, back would around the Just hyperscalers with be next were to mean quick four, that, to potential or the were up would last fourth the potentially the hyperscaler in Or given to fiscal at the we does shipping timeframe? to of we the that shipping in quarter, go FXQ? three couple thinking we I

Jamie Lerner

customer. is Yes, not up. we’re each point the mean, business mean, just I where now we’re out loading a listing at I

more between a to And a business with hyperscaler. doing levels are with of starting different Right. are than volumes. just than at they’re hyperscalers, we’re and more purchasing They’re work somewhere now groups We four tape webscaler that products.

businesses But now sell to still enterprise nature. are starting top than much four they’re than maybe larger the that or we’re three smaller hyperscalers. So, in to an enormous

So, more we’re hitting we’re just customers. – with

pyramid in the two with you if think we top hyperscalers three slide, remember or to just world. that work the used I

with Now, large we’re dealing telcos.

with large, types service dealing different of We’re providers, webscalers.

They’re large of hardware, of more management to want the as I little is is biggest these software movies starting are business products, buying our some much our and primary diversified. scale multiple what television, as to and CatDV customers discussion make to certain hyperscalers by our buy a encouraged that solution, the our buy and And So, more also they’re movement products. media think I’m starting becoming and products. and the them more asset

as hardware where business, healthier So, now of more a we diversified business. just it’s and lines started what multiple sale have becoming big a

Craig Ellis

all a the the longer of of company. That’s helpful, some Jamie for tough comments. that way, thanks on advance are and objectives by situation call, the Through the guys the it’s clear using term to you

leadership mentioned a times. couple You

I wanted did team, look So, like and add I just follow some the broader to to a Cabrera, surveillance video Asia appointment. a up experts. real believe you add Brian sales important recent on

meaningfully would to got we organization and set there? organization appointments you’ve the that is business are the you to more envision question or Still that where are forward? from the now? we driving Where So having make relative optimal

Jamie Lerner

I’m mean, evaluating. ever you’re I leadership, not Yes, to sure when You’re comes Right? it constantly there.

company And even years very year even different we’re mean, ago. place growing in in is I in we’re constantly a the relevance. Right. situation You’re improving. growing two one our it ago, was than is size,

we I best so I’m looking that constantly very think And the company. find into leadership put the to can

company. hiring going much Nvidia. executives best was pick in leadership done in our we $XXX we’re But to have team, and And think we building again. years I’m that at the mean, NetApp. our we million Pawlowski him in normally XXx a in. have building a is million we be ourselves point. hire, cap amazing put years sure a it company it I would I heck than But million at of do Brian low And company. ourselves before market a company. remember to than $X see you the think and $XXX we billion team so because it’s three XXx it. We this industry, CTO leadership ago, to was do team, see an could don’t goal need effectively And kind continue GC hired to leadership lot more up over three company, absolute as you wasn’t a was the And I we’ve this we a And a because leadership. the a the when as of the So, last going think from to see Brian I stronger $XXX going we’re we really we’re state that, strong to at

keep stop to we going if going do to every people going all can we need opportunity. talent. We’re we upgrade to difference. finding I’m waters. seasoned Because just the have I need bring drive able most And that through makes leaders, it’s I time on to not better be leadership find. that the more choppy these to I’m And think

Craig Ellis

Jamie. Thanks, That’s great color. a

Operator

We at further from have lines no time. this questions the

Jamie Lerner

to will so you thank meeting to for Well, thank safe. make always much. us I’d hopefully Thank many everyone like We and of we’ll everyone in right. just ourselves soon. All like And very you. and calls again Mike person having I joining want today. be to be and available be with

Operator

gentlemen, conclude event. ladies you, and Thank does today’s this

have wonderful disconnect Thank you You And a may at day. this time. for your participation.

Quantum (QMCO) 27 May 212021 Q4 Earnings call transcript