QMCO - Earnings call transcript Q1 2022

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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 First Quarter Fiscal 2022. 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 call is being recorded. I would now like to turn the conference over to Brian Cabrera from Quantum.

Brian Cabrera

you quarter today’s fiscal thank discuss call and first Quantum’s XXXX afternoon for conference joining to Good financial results. Quantum's Cabrera, Brian Chief, Compliance and I’m Officer. Legal

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

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

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

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

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

Jamie Lerner

today of joining all revenues both million, of us and the our at earnings announced for thank high-end share net results income Thank you, today’s and call. Brian $XX.X adjusted first and up year-over-year per fiscal our for we you Earlier on quarter, guidance. with XX%

remain We strength X% backlog robust our increase reach quarterly to bookings. fulfill to revenue. less unprecedented customer Historically, due remains ability all at with supply orders a hyperscale ongoing driving in in levels. which restricted demand backlog meaningful reported end of customers sequential has our caused constraints, our been our has Our to the or

$XX period. million million ago year million previous in in first compared the quarter $X to backlog $XX and the quarter, has fiscal of As our to grown the

business, robust potential across the in our While of following particularly end and not seeing are the higher our all demand backlog levels represents we hyperscaler remains customers, revenues with significantly quarter, visibility.

long-term the will our continuing key Despite following continues constraints, to near-term quarter be from to the strengthen suppliers that forward. closing see our to strength signs and out in starting transformation move We more of there business industry quarter. are supply one this

During sequentially XX% with quarter, up bookings and subscription two-times. our than the more grew customers software

the to pleased analytics for group. a which the While revenue I'm we Salesforce Quantum strong Systems group, scale Box the June all-time media progress off our revenue delivered during quarter. recurring acquisitions contract CatDV of cloud increase continue This Square base, the generated and benefited Also wins an increased of make figure quarterly quarter, asset toward to small we from recently a six the model. record and management still business in software represents during global the the with formed a our and more shift

the system, and a to completed flexibility. as see also discuss this in financial refinancing line transaction and software discipline greater ability detail this We drive in to customer to increase as with remaining to remaining $X reducing total solid our our debt financial by by enhances have annualized aspects cash maintaining covenant $X our interest and our commitment our to balance This outstanding CatDV the in current selling during services, created his Quantum such already more base. improvements a seen transaction -- We debt sheet. a strong our leverage remarks. combined of million refinanced cross-sell product and Recently, results, significantly interest order while also StorNext restructuring significant shareholders our final operate our solutions, in file represents expense prepared we and million. debt, in bottom Mike step will term expense successfully in both

June received strengthening in $XX our as subsequent prior has In from addition quarter, sheet. Protection it in to the be loan balance our Paycheck business our XXth, short-term Program successful is $XX balance removed currently This on administration but further the our forgiven. million small represented refinancing, debt been million sheet will that notice of we our

systems airports, products federal a customers multi-billion-dollar surveillance The Quantum, the including at video Officer I acquisition leverage earnings customer in surveillance our in there BF transit in July, server we and to XXX programs. portfolio running software with on major position assets PivotX. last very portfolio established the product PivotX globally, provides is in video development joining acquired portfolio. significant call, Having hyperconverged and share casinos, surveillance. and prior record PivotX to store Another over Operating currently I footage transaction our advance customers Quantum in These base surveillance the an since Chief hardware The to market and and served from and mission-critical workloads. with use am government adds adds series surveillance tremendous the believe product software customers, our familiar opportunity their platform and for these as large

has a already positive. of team meet analysts has to had the customers industry customers and very and opportunity number Our from these response been both the with

We EBITDA the fiscal year remainder be is there opportunity we we of to XXXX. customer see the higher education, through the retail, slightly and to and stated, And significant and meaningful we to a on upside team As expect scale based and acquisition sports, surveillance early already this sales Quantum's cross-sell market are trend solutions we opportunity upsell our traction. customers to government, and of global and the entertainment, base. seeing accretive media in believe potential

than storage video thereby in surveillance and is particular managing, for retain and analyzing, for and emerging the of a access is that security being content. and video to so entertainment to long also expected significantly for training demand expand use increasing provides and new insights. streaming the enterprise. enrich customers derive communication much AI video use more video enterprises for grow, continues to and services sorting this periods in big quick Surveillance and the efficient used just of market of analytics time, opportunity and for in solutions represents the does for data Videos many for the stored need As for the to the the use content easy help

surveillance acquisition more Our this prominent key is of in market. a portfolio a step establishing PivotX toward position

strong and customers. have increasing orders my I to continued comments, As from hyperscale demand mentioned see in we our

based established effected as the on have share being we The is shortages. We that of in to leader our tape for the most offerings. products, space, our by this market orders share current our the are in is entirely strength continue gain area which ourselves almost the storage supply and market

We across software position strong in demonstrates market expand world's and markets. sharing progress archives The leading the the as of Quantum adoption our generated an knowledge amount analysts the we growth storage data our solutions of data solutions seeing recent now data to protected into services in CatDV multiple globally base. share within strong working hyperscale have projecting stored XXX projected of regarding Systems the summary, help forward our footprint the share and leadership our sold customers from ability systems. broaden on increases We coming and Our to the to this months. that acquisitions cold our teams enterprise. in are in transfer our Box development new our to alongside opportunity across a gained and solutions hyperscale cross-sell to software customer Fortune of expansion. amount our and remain cold addition unstructured We're of ability being see engaged data software Square multiple of more cold information demand, architectures, this the in hyperscale look from and storage December accelerate engineering be video acquisition building to PivotX and in in exponentially. software integrate We're storage continues must establishes Industry surveillance. tape massive and to massive address end and customers solutions In companies

CFO, demand and demonstrates the like across progress to significant With Mike? in business our I'd the call backlog that, Our unprecedented we've Dodson, over our trends. seeing momentum and the level been turn underlying the of financials. that business Mike discuss to to

Mike Dodson

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

acceleration underlying Our strong represented first demonstrating our business. another demand, of continued fiscal quarter customer quarter XXXX in

last As were key for year. $XX.X from the sequentially, secondary more quarter components. fiscal up X% during our secondary obtain present by headwinds Jamie but storage our quarter. remained XX% systems from was shortages Revenues million, ability storage supply first business same revenue mentioned, restricted Near-term the to continue to than first up period

firm Jamie of we this quarter the and do begin in As the to by quarter. improvements next mentioned to opening chain to up into supply expect his show continue end remarks,

a on constraints to is impact revenue had early And In separately lesser as of of less the see devices limited revenue. products. comments, sequentially, do in our systems understand Jamie's related backlog sequential our the extent, were and to in our sold improvement quarter. too Primary storage period. impacted business will declined than by decrease to result differing COVID the lumpiness equaling media of of X% basis. The line we a with quarterly has the subscription slight reported starting primarily historically, rate business software demonstrative the a certain supply still fiscal M&E Although, of believe during we a improvement, recovery it third very

from a contribution revenues grew hyperscale backlog our revenues $XX.X comparison, Our order to quarter at quarter, million, million. period And of end backlog the a the with million $XX.X year backlog of fourth ago, million, in $XX reported with of million. with $XX customers. $X June reported of a In of significant the we

retirement backlog higher remain the operating $XX.X first fiscal robust sequentially. in trends primarily $XX.X GAAP in While G&A expenses $XX.X lower believe and and expenses expenses and driven to related by expenses marketing $XX.X last and quarter prior included a loss audit the sequential following quarter prior expenses was operating potential an fiscal services, ago offset the first The was loss by quarter The operating well $X.X to in were XX%, of of and loan million basis, charge the to debt which to quarter, sales first our flat not $XX.X year the XX% quarter or related extinguishment million $X.XX higher loss and increase was versus with the million our On fiscal in improved a the debt to all acquisition revenue per a and in increased quarter. quarter. million business non-GAAP costs. expenses prior in net were R&D legal partially were total, in gross significantly the in term a secure margin due the when million non-GAAP per as related we looked million quarter. share administrative of has refinancing GAAP period. senior of business seasonal or a the increase of expenses, GAAP the primarily compared as increases compared million, general quarter, $X.XX share that of underlying of represents $X.X Non-GAAP other visibility expenses. loss first in net in

revenue quarter. basis due directly $X.XX and charges, compensation, a Adjusted was the reflects stock to EBITDA non-GAAP breakeven per the Excluding the operating non-GAAP of increase to our non-recurring million the and quarter primarily an was in fiscal today. is prior million to share and expenses. restructuring adjusted million, the million reconciliation first both first decrease or adjusted income net charges a $X.X sequentially, results in quarter $XXX,XXX fiscal higher during net in on income compared which GAAP $X release There $X.X of or press lower release a $X full measure Form of year-over-year most comparable XX-Q and the

accrued Outstanding was by fiscal result million balance in $XX.X June Current portion This netting fiscal from of $XX million was equivalents million and capital, quarter XXth, current were debt of XXXX, March liabilities. increased Adjusted a first costs portion includes long-term in of in $X.X sheet in as the debt costs $XX.X the other was in of during XXXX the June $X.X of the issuance of flows. unamortized balances, million $XX.X $X.X issuance the debt March payable primarily which PPP million to prior as million on and XXst, debt netting $XX.X Cash long-term cash million to turning loan, million million end $XX.X July. at to long-term as long-term $X.X XXXX. Now outstanding after XXth, decrease and million the accounts quarter. unamortized and after to $XX.X debt. of increase forgiven current debt. in and liquidity compares XXXX revenue working million compared This debt $XX.X of XXst, excluding deferred million cash

XXXX million of and cash assets liabilities, first changes changes $XX fiscal the our the $X capital by operations net million, was in loan. of fiscal of quarter accounts. $XXX,XXX. the of of in Other we notable before $X refinancing generated cash from by the term of effect announced week, long-term secured debt expenditures were cash and in the portion first capital outstanding in the Last million remaining quarter, working used offset in senior successful of During uses paydown

benefit million our of expense $XX $X which process, rate points. reduced Following reduced $XXX of operating significantly new Then, $X annual rate When expense our approximately which million of lenders we which a our of recent was $XX of interest and company quarter, plus This of represents a facility new run payments. loan of of completion we flexibility, At and proposal competitive million. no in on following of drawn with $XX while with into represented expense payments calendar were represented million secure LIBOR cash by EPS the incurring for an run a an half annual related payments. Collectively, the senior that of annual perspective, term XXX existing an expense under company's to which per the put end annual in The with year XXXX, million improves the refinancing interest the term replace million $XX this covenant existing remained debt, of credit just expense. when $X.XX our basis fiscal bears loan matures the reduction and term interest this million interest these raised interest refinancing, XXXX. the were February interest facility rate the annualized of down To $XX our first reduced reducing transactions payments. interest equity to of have year, cash funds $XX there we million line. began cash the million of we cash share, paid further significantly

turning our outlook. financial Finally, to

plus non-GAAP million, range At per loss share the includes timing million million, adjusted from with are guiding or net of minus year potential plus guidance quarter of $X a the reflecting improvements. million supply of the for the million $X.XX Given million, PivotX minus $XXX chain revenue net $X $XXX time, which we plus shortages of to full adjusted plus or chain between $XX the $X.XX, range adjusted million. or the EBITDA and are revenues $X maintaining of we million second XXXX, acquisition, and minus our magnitude minus $X non-GAAP million this of loss ongoing $X $X contribution or supply fiscal

Our fiscal I'll to back With projected excludes guidance year Jamie? call from closing revenue comments. contribution XXXX turn the that, any for PivotX. Jamie

Jamie Lerner

to cross-selling Quantum Fujii, Markets conclusion, Wittich, Business served team has be of President execution environment. In as difficult will most in remain position of Demand see portfolio further restructuring our Strategic the our and heading at new during will to Curt growth more new order the as like focus Engineering have. a model to behind team to will expect Vice Fortune With quarter. immediate I'm momentum our from us storage is General XXX who enterprise up evidenced flexibility We're that, PivotX opportunities financial The backlog a Thanks enhancing we of strong, solutions. the Ross Mike. whom welcome opportunities customer SolarWinds data on our solutions. Operator? would into and over milestone Unit, seeing the us, solutions. operating you increasing members we continued a led by significant with of across may surveillance establishing of intact. Alliances for delivered recently global our growing software-centric debt allow and both a with transformation with opportunities product the Manager by of penetrate responsibly storage pleased our long-term software and With accounts, I offers any our access The archive grow now in towards leader acquisition take our software customers Quantum's remains to and new business and XXX business. and the PivotX's questions Sales.

Operator

first have Please Securities. proceed Craig now Instructions] Ellis with with from our question-and-answer your question will Our we Riley question. comes gentlemen, and Ladies B. [Operator session.

Craig Ellis

I guys, in the in to backlog. within dynamics the first start wanted growth what second revenue quarter. and congratulations product the on Thanks just question Yeah. the with seeing and quarter a on the for clarification the you're taking in

you first in I'd a the and can provide on expected? then, was the storage secondary government as What customer more some quarter, just than and of what within of down look since that below and in And ahead, then quarter, that color were some for you new what So, we gives takes primary are second at level, the happening little the things bit some that see more primary with the the segments? guidance. did of

Jamie Lerner

Hey, a Craig. It’s Jamie.

we're things. think seeing I two

customers, are We're well largest with on they're and engaged orders through cloud hyperscalers doing whether placing late particularly hyperscalers, XX or Our in or increasing six really going trials the stage trials. us. now production we're

So, of momentum tape them lot selling predominantly we are most products, picked up the but which are constraints. there, a we

from historic share up Now, levels. we're post-production a our and entertainment Media see, the year other a year from high-end in and while legacy sales ago, up our historic now. leader XX% market, at not still and entertainment, are it's where they're media is ago, you

see going summer major don't by Delta movie and the COVID and we variance. people So, blockbusters and production hampered is this still theaters

So, And levels U.S. is point. historic a we but think I it at in not that Europe in this entertainment is more the media at and business, and Asia see than stronger it it's trouble even

factors. So, those we have two

at other to improve, have components our position. mix anticipating from this historic they you will suppliers weighted out improving in December, but as did we're seeing get into are our the be much hyperscalers, look our we in we're get news to we balance -- November we're constrained, that If it but a that and gave better indication we estimate, at levels, October, but not backlog, towards a most is quarter. be getting going conservative we constraints tape still the are We each which selling and

see into fall convert should commitments. to we levels getting Now, suppliers have data as higher and they're commitments winter. timeframe. yet, improvement going we're strong to be in but that those And we'll get don't that We significant they we be at from say ready levels, into much that at the while our we're supply shipping not historic very

Craig Ellis

or in then guidance Mike, gross guidance provide Mike. That's near-term guidance, you elements, just follow-up is most was thank that could expectations current it. to Jamie, that? for forward, you think any the the around going but timing quarter that your the the that can margin? year is if his a to And the color deal reasonable quarter's include synergies guidance. to would fiscal we then helpful could on into PivotX be the And I the I you as some the or proxy really didn't reasonable think it prepared of And year respect what near-term guidance, revenue fiscal the do hit got get Jamie the it Got but Why fourth about adjusting for year talked of with to of in you. in remarks full quarter included third and of full start the there.

Mike Dodson

Yeah.

we integrating how to as quarter's as into So, much to as have we current current PivotX, related Quantum. business But that expected in to far we enough call move contribute it quarter, revenues. forward, we've good included out be how near-term, the to the we'll visibility in the

to be come current PivotX, the called course, it wanted we've kind ship And, XXX annual looked how make backlog range, quarter going the is of year that that wanted year, can was our full statement supply How of we But XXX the still constraints So, to to back? guidance it's we was we dictated really the as quickly whether by by these guidance. when full to it the out. already? we quickly treated related how standing were So, and to against we at the have the does -- guide. we we

Craig Ellis

you us the Can models? cried the we I our count was Got bottom it. cash, get that some can the help with related then the elements share so it And share of stay just detailed to some acquisition. know in shares.

Mike Dodson

bit million paid. at was million Sure. that cash, Well, deal of had fees a in certain and shares, total a the licensing little $X we you look -- when $X in we

quarter, $X.X the the shares know look average So the XX.X XXX purchase everything million. account, we average, a total the we was for million five days share closed. taking count, were weighted we And million When that's based the ended a it we On on total at diluted of price. and that basis, to before just into price, million. on how we were XX.X got

Craig Ellis

the the Got in Thanks guys. for queue. it. And I'll help hop back

Mike Dodson

Craig. Thanks Okay.

Operator

you. Thank

Our comes next may Northland with Chokshi Shops, Nehal question. you from with with Please question Markets. Capital your proceed question. your proceed Mr.

Nehal Chokshi

Yeah.

I and backlog Sorry. on transparency clarity you on and mute for strength strength was booking there. Nice thank clear booking and therefore the that here.

So, is end looking expect at the can guide, at certainly the current bookings constraints. demand, to around thus midpoint strong the of comment question what say, guidance. like given, implies QX that The September you ongoing you the quarter, of remain and key on commentary backlog the given supply then, you let's look [ph]

Mike Dodson

level the this would backlog, much this that less would but of at rights continue $XX We expect million, quarter. to Yeah. at what build a we we guidance than built

Nehal Chokshi

Okay.

it strong in as then be seasonality, as that not quarter. on? bookings that September imply something or that in the the your that quarter going so would And was Is is else would June

Mike Dodson

I mean, of the that quarter this big saw hyperscalers go beyond orders really placing quarter. was the are we strength part the that

So, they're already in in part just queue that of is the queue. the getting that

indicative necessarily se. not of it's lower per demand So,

Nehal Chokshi

Understood.

XX. Okay. bookings than then customers that and and grew XX% up then, were And subscription software the the sequentially more

a So -- that Is CapEx to basically a dollars but that profit more converts getting not that from dollars, … per only that gross subscription. actually implies you're customer revenue

Mike Dodson

Yeah. On average bigger deals.

Nehal Chokshi

evenly to hitting subscription the going most storage? primary be right. or All of is between software primary presumably, and distributed is And storage, and secondary it Okay.

Mike Dodson

because Yeah. Definitely today it's subscription. that very towards heavily StorNext the is that's primary, weighted selling product as

the forward, service, we with yet and we forward as side, see storage a be that is but we'll more to released. on software move cold As a moved secondary

Nehal Chokshi

growing, Okay. software product could seems but gross All Yet, storage. here on other profit respect that actually like transition in does the negatively. you dollars, case and And subscription certainly only be dollars. with it's impact And it seeing to primary revenue other where the look, saying hand right. are that it revenue not the stories actually

to you security So, can really the dollars you what's customers decline and storage the seeing bridge increase transitioned just say versus between these revenue naturally subscription? and the as primary software

Mike Dodson

Yeah.

we're we're really transition. the seeing -- the think I in what stages early of

did in remarks, the we slightly by that deferred it -- was prepared we revenue as gets So, -- revenue, noted our impacted subscription out. because gets our it preferred

early gets see little part a that it bit of more as that saw I have would your more scale, we we'll we'll difficulty] -- question, of [technical to -- So, expect

Nehal Chokshi

I'm sure you just connection. Can out. not me But too if hear it's you my cutting now? guys

Mike Dodson

Yeah. my It's connection. probably

question So, just pass finish my the and then mic. on answer I'll --

Nehal Chokshi

Okay.

Mike Dodson

I would point. on your we're it’s it to pressure a the response, my subscription early So, -- have be at model, to -- not material mean, -- still because model. impact recurring it's repeat to but you seeing transition this just expect we're us you a at yes, revenue under subscription as that, revenue doesn't And very the it's stages,

significant. So, of transition see more not expect the we still is at it's the that further we that it level into get impact, would to today as but

Nehal Chokshi

you very much. Got it. Thank

Mike Dodson

Okay. Thanks, Nehal.

Operator

Thank you.

Iwanyc with George with your Our next question comes Please from question. Oppenheimer. proceed

George Iwanyc

questions. Thank taking you my for

bit near-term more. So, just little a maybe guidance digging into the

normalize the is you're the back, for it software near-term is pulling of And headwinds three-year $X of you’re better still that primarily transition? expect that you kind for still much projecting you if million primary then, than So, is for? storage the and how

Jamie Lerner

pullback being of get Hey, Yeah. the It’s material. able not George. off just Almost is taped to Jamie.

are higher of we tape just just their than -- all on still mean, we a meets sales component. beyond we contracts. our have we mean It's I are or I primary, mix objectives. restricted how ship can can the plans. at because very our sell we much levels. we meeting historic closing a -- it historic So, beating but key tape or We're sales team could is libraries missing

ability based QX, get in little So, some then in modeling again, improvement now, our if more to deterioration. supplied guided no the And and anticipating on some visibility are we'll pullback no actually and improvements But fiscal probably in some get this significant quarter. we even or there. back on anticipating there give and but we're no this improvements, quarter. right phone And improvements improvements

George Iwanyc

Okay.

the you're at feel the deals? us how selling seller of the maybe strategy XXXK multi-product you How give like are have -- seeing team, So, can you point? from larger selling sales sense the solution with now? with, about you this positives right plus activity much much seeing do you a How

Jamie Lerner

we updates single customers -- world's that the all production a Yeah. deep different we then are of multiple. we customers. point, either have are purchasing. actually mean, there a largest, I I and ambitions of would And of levels And and with couple had them at closing seven this started six hyperscaler say they're of

So, down would by share lot When say ahead the in comes the are hands we hyperscalers. to a are storage, everyone it cold of XX that in top space. simply I leader we

second our properties, $X an webscaler of hyperscaler companies. two was the slightly think Instagram companies press them majority business we of down weeks a out exabyte or webscalers? awarded winning to can We into of web our we were over the those the after ambition likes The of that big found million. first elk ago, to TikTok, probably win about Now, three are

queue. we now world's that now have one closed to our of others the we've the feel largest, we've comfortable in webscalers, So, and close ambition

the We out -- more and that Fortune month that and much later webscalers targets the a product that packaged And make repeat. have motion coming clearly XXXX. this selling will

management large them software. software, hyperscalers, five storage software, our data In monitoring software, addition of of bought have our six

I still was. just making that's us. leader high-end going them less We really there's movie -- television share just in It's post-production. one and time think there at So, the remain for well

will come think but remain it I that'll right impacted. back, now COVID

share to million doing that that, we more that our economic found is to way surveillance you, We business. through quarter there company acquired $X I an well a is more we was fastest than company balance to but can had get a the million tell piece ambition a in than $X a certainly of PivotX quarter. halfway a that video quarter, very purchase gain Now and

We're to So, share webscale. we're the get hyperscale. leader high-end in in starting traction

PivotX. share post-production, We the and with entertainment are and leader that made business impacted of in is media share a high-end huge the we've purchase advancement COVID still

to out and two that in got XXX I their supplier we'll of backlog who's on we're October that and be they've and coming to give a going playing late in be of range, think well And conference, think strategies our coming at an three update have an had, the our think, to going restrictions get I've able that life difficult, flow thinking they're point, it I I our next months. made that is, New York. really guidance. And problems we'll out behind think we're inside investor to but and out is I through. supplier So, us XXX in to And our we'll

fold So, supply narrow we'll we we go to and three months into we'll time. have think XXX sit And know be well range tighten PivotX pretty a able in in motion guidance. that them. I so the constraints with we'll get the the XXX that range And October, of we'll can lot and that exactly to where things as that we through out figured that two to selling that by next clarified think will at I

George Iwanyc

All right.

transition, looking there supply like pace you're customers go subscription XXXX. opportunities. are And that? question for In to that of opportunity. like at none software about to I ability you -- potentially FY your being opportunity. fledge one a your maybe was another I new talked imagine it's area Do you Just feel on was thousand getting an felt that ransomware last still constraints like full after the of in probably

Jamie Lerner

two still a the have product strong physical that. that choose us. for think specific there's We building very actually I for opportunity we're Let's a out. ransomware

with it extremely widely towards of but building that need make we're the going the of end year, in to physical more productions actually we're a really -- available have limited hyperscalers protection. some really unique who around it. few ransomware property We But intellectual rans

feel strong good and I going really that So, think to that's for be us. I piece really about

of had your another You part question.

George Iwanyc

Yeah.

pace You and feel like on software you're adding customers. subscription

Jamie Lerner

Yeah.

a is I baseline XXX stretch goal was goal and thousand. think we're -- customers my our

do we're for our products the on going of thousands need is still And to what move subscription. of more XXX. pace to stretch. I I think think a to we're

product CatDV DXi on yet. on is not Our not is yet. subscription subscription

And I the think, if few got number. we products model. And to function willing customers a more just how new move that model. thousand quickly, the it's to are of we'll relatively transform so, subscription that to sense we've closer think of to a do get I into And a getting

So far, quickly. with to And more managers it's got to we just pushing transformation. I'm subscription over products to the and the transformation StorNext our move scale models been active pretty fluid model the our more of bring to general that and

George Iwanyc

you. Thank

Jamie Lerner

Yeah.

Operator

you. Thank

Capital your proceed Bruce comes with Our question. Markets. Please next Street Goldfarb with Lake question from

Bruce Goldfarb

you your my on results. Thank taking questions. Hi. for Congratulations

alleviate shortage price shortages? terms changes to regard to in your anticipate in to do suppliers issues, one, of of with any First try you terms component or a contract some the

Jamie Lerner

This year their changes go in in they structured supplier how it. had the and about No. -- products earlier they pretty some price

don't made And the offered -- in COVID you're purchase continuity? you more mean, those we there's and pricing, outbreak offered see supply? a in if factories getting function but faster, them there ask COVID queue? get with -- they're favored these to changes. best We've most of not a really hey, that, ankles, chips money, we a I make Could price. would and I you supply function if a questions. things we had allocation it money, move and up more if -- we and best spend price Is in like, need can get So, the would people provided can't of going you could just the tried on but it's volumes the to into It's obviously, all all factory. more those get you you further

result. you does want checks the a it get different all and write can You

Bruce Goldfarb

thank any you. And then, you in then And integrating get difficulty do -- PivotX?

Jamie Lerner

don't. I

that has stadium I the retail in sports pretty customers, auto media with, work our use synergy the government been of they're sales if all we great. whom current and I large large racing, look companies, and entertainment companies, mean right? banks surveillance, is, franchises, do, What that think at customers, every surveillance There's entertainment you by large large sports team.

video And go our to trust production a team we've so, we helping years. video Would are seeing XX really good look, your surveillance? sports and been well. places facilities, as And playing is laboratories. well also it's national that are really mean, university of synergy all out with with users you with work, we surveillance. say, for your you Whether as us our critical that also parks, where theme they're heavy work synergy I

is ERP in So, work with in an is the IT middle out the I think synergy real-time. of playing some integration upgrade. system. There We're selling

older that to integrate we of get before systems -- but we've place want new required. wouldn't work, it I ERP think, I these some in we I take And our characterize difficulty. ERP will So, it some as don't

sales, support. having straightforward. responsible to I think -- been for chain be Operating pretty it's I was ran also engineering. Officer helps It going Chief the I that supply sales

And that unique run Curt insight with sales just that makes so, happened to nine have I easier. had for years. Wittich one who us for that PivotX been somewhat organization

insight made So, just had and worked how runs there. having easier we lot a into quite the a bit that company of it certainly diligence

Bruce Goldfarb

the That’s you. Thank all all progress. Great. I and congrats on had

Jamie Lerner

you. Thank

Operator

you. Thank

Please David proceed Duley question with Securities. with comes Steelhead questions. from Our next your

David Duley

constraints the questions. thought A try your of take the impact couple a quarter? quarter was or either Yeah. of you your you Thanks perhaps for my in just them. June guess Could at September supply to what taking

Mike Dodson

Yeah.

way we backlog at quarter, easiest quarter of backlog, our is of we the we shipped to and had the million it the roughly that Dave, then of is, that a third And two-thirds could $XX that had within out that, beyond. have when look characterize next carried think -- quarter. I you parts, the the is of

So that's the way probably characterize easiest to that.

David Duley

XX So, roughly million bucks. then,

Mike Dodson

Yeah. Yeah.

David Duley

to model guess I systems, going business. of you're to And your this better all kind have would expect -- supply decline, shift Okay. you this your is this you where when or are -- new facility, to available the of backlog in a

Jamie Lerner

ahead, Mike. Go

Mike Dodson

go Jamie. No, ahead,

You can.

Jamie Lerner

form want hey, to to talk because we and I'm the the the go TCV, a expect hardware it. talk in to traditional our We about just think where back is about. we the We of sub-$X What based it's don't about to libraries talk That's to in I about, level missing want tape ARR. I can't insignificant. backlog million Look, RPO, ship component. we backlog talk backlog products don't want

hardware want essentially isn't think revenue. revenue, backlog It's ratable backlog. grow the million way subscription, more our really go level. what will really what want about we've So, I to a $X build, software here, deferred the backlog. RPO, again, we That's just we to which ARR physical talk to is, a got and not that million And backlog, we which hardware down $X to back is

David Duley

business double then, your the the a now next customers, in expectations could your of size, And or should let's perhaps got can you're give for Okay. business XXX kind run surveillance you've how business surveillance and $X this years? as What rate. quarter, have of kind over the doing you us that kind platform two goals about we say, guys? and to a the million of It we of three you growth in trajectory think for

Jamie Lerner

markets XX% license and there's facial view and cameras, as CAGR north customers really for more the actually as the work, that's -- for recognition, growth include just recognition do XX but We've the that gas compute casinos, been it compute cameras, plate allows biggest work, We've many, And really got storage competitive just XXX a the it as GPU localized do And biggest got with hardware drive market more more And that. more chasing pipelines, really applications the analytics, as world's cameras Yeah. all there. have does not separate well-positioned we product the like in a storage, hardware. China, they with ability PivotX power. a so for brand. be grow natural very license stable, And just years, strong fidelity platform growing higher that's to globally. and per plate more and work. storage, it biggest you well world's which departments, growth that's government largest consume We in purposes that. police billing to pricing many we it's analytics projects, marquee reasons, the has analytics to Surveillance We I with installations. do India putting platform and absolutely software-only, more a plan view the is a we storage. year. consume cameras growth And cameras but systems, computing military both business software can of think also have world's we're the of using recognition, for do throughs. do and more grow a us where to we're want all business. to plan It's and some smart that -- we prison more sell converged large a the It the geopolitical that using and the reasons customer And base work, hyper-converged city we we're just

an geographies who we amazing can handle help in can business China. where the have portions. like partnership India with and They the portions do Lenovo us We handle hardware software

acquisition. grow. I We with XX think very the successful in positioned to sales brought we're us really over So, reps

that we So, now have to that almost of shy overlay XXX-plus going work specialists, world. surveillance today. got we've around XX sales people just they're And -- the the

all I there's our Lenovo, integrators. are with of in both partnerships amount So, we I base, new think think and a our like of well as there's security huge a have through synergies, lot install coming in customers that of as

growth by us. little slow been mature our build a buying business to go. development business. that our platform a take We we for a it's were yeah, was a growth and organic ready It's up technology had to stable, an So, to always opportunity years

for it us. really So, worked out

it's than three So, in more two we years, yes, a business that I double. to can think

David Duley

margins year. And guidance sales the just a you'll -- a in final, sounds the Mike, the for the lot quarter. would question like of the guess on But of happens? that funnel. conservative to implications I a through margins into when I move December the quarter, gross What's half see the get gross It September back backlog guess in

Mike Dodson

Yeah.

be secondary recurring think the and margin as gross the headwind. and we And margins. got business, right? I the business grow two to grows, we've the that primary factors, the by hyperscaler that's As revenue, revenue, grow going improve subscription driven business will it's

So, we the in near-term. forward maybe as they'll go offset,

at current bit level, but plus only a minus the expect be better, I'd marginally. or little So, to maybe

David Duley

you. Thank

Mike Dodson

you. Thank

Jamie Lerner

Dave. Thanks,

Operator

proceed question next questions. Everglades your Resources. comes with Our Please Busch with from Steve

Steve Busch

Jamie Hello, call. my and taking Mike. And for you thank

years good has see for want say, all last your thanks hey, improvements. hard been work. Just to to couple The Quantum's of

that so, of in levels? be up on back my they even if to keep to just component going get supplier, we And they with kind any business, historical are able have growth that to first the the future question

Jamie Lerner

bottom visibility. And is that And get empty. just the The have from They'll we literally years depot to XX from almost them to want it's -- We bottom. worked the forecasts. we the been never hit never over to of and as have Yeah. with them this historic levels the rare way hit when need have supplier now, we've been levels. give give as depot we beyond drawing always draw depot. And and been historic do. able this Historically, depot routinely for drawn it depot. we've they they've a we We much and is literally pretty from and

know if I that don't handle, get And quickly. get enough carry should they when it to to large return able be inventory that. back how they orders they're that to tells able usually growth. me and we can think headroom normal, to or excess I get So

going But them of they're quite might higher another that that strengthening they're we're able I to just think the deliver quarters the that on us numerical to we'll few fall. getting they'll the But indicating much overstock. make. going think be today. we're until -- than into is waiting depot coming to levels And see we're again, component strong bit it I getting very words from see a be to they're commitments

Steve Busch

Okay.

and need second So, source, one there's the anyway. a we don't

Jamie Lerner

second no this Yeah. for one. There's source

Steve Busch

Right.

there mentioned, And of problem? so, You is kind COVID-related? a is it

Jamie Lerner

everyone Yeah. outbreak, a in single Asia, components the they by they I those mandated home. mean, -- of and supplier and COVID source have these when lot a send are when are a government. it's made they And

keep choice keep we're if like people and here the hey, does the people And to going so, to have say, on you factories. COVID, shipping get Amazon even don't

And that there's and factory that core just we're a issue. give go you've been to that's to really look, everyone outbreak, -- going got has two the say, idol. not an that's a If governments COVID Some option. weeks you home for

rigid single a a a single it's so, in model. pretty it's And supplier and country

Steve Busch

Right.

that. Thank you Okay. for

So, at your I'm slide looking today.

slide it's similar where cetera. of think slide -- the five our the page it In it's the are Investor correct? AWS, -- very Microsoft, for hyperscale Apple, I'm Google, presentation, lists archives, Facebook, XX, customers, May data I and May titled bunch those webscale of a all et which is assuming to presentation,

Jamie Lerner

but the are describing that's the as well. of our that but those to type many -- That's customers. be not of indication customers, customers I those of category, that meant elk in are an think Quantum

Steve Busch

Correct.

Okay.

companies do were an with any are to products ransom partner So, while customers all to little bring of a their them? ransomware. any with you we -- out, we like ago. say -- for we kind growing ransomware, discussing Are Are with able AWS, the

Jamie Lerner

of be Yeah. end going the was that think to the we're the bringing The solution of the market, of it co-designed towards year, hyperscalers. with one

Steve Busch

what good you sizable? product That's out three overall Okay. is two, of And say that years would for market, to know. the kind

Jamie Lerner

brought is one has the I The that in we It's market. to a know. else no Like don't short answer haven't said, product we product it's that market a yet.

of we security seen. market that address know that percentage going is to products our What think be yet I large. just anti-ransomware all is and market the to

really the unless -- can't just And they're resonates. both you different We've way on literally feedback just It data service. the about or to is and how it's little before. anyone's remain. a and understand, the it. system, them. off No been as get is and infiltrated and the network. combine that's no just physically interesting a are to it to need a us approach. rests many hackers unhackable the a approach a how of going break building, There's talking how going present a we different turned it's matter completely -- to the not get just market in taken you into and storage giving analysts So, And than it are we anti-ransomware because it's positive just be lot see us to literally to time cold It's to data

basically when it could the package, data storage you cold anti-ransomware buy or then can that no disconnects where fully to data. our no your storage it So puts with onto ever any get which robot you that solution, cold from technology network get

but one to has about it, few really going the how So, we a to We're quarters that anything get we market. package be on a is of again, sense like combined no resonates. excited I think of need it that feel compelling, sales but

Steve Busch

Right.

Okay.

you to All Thank your right. good for me. very much efforts. Sounds

Operator

Thank the any to you. There are time. management this no further questions at closing back I'd like floor over remarks. turn for to

Jamie Lerner

soon call. hope anymore. today's updates about October With that, won't data. discuss we be Not will everyone. I thanks within pretty conference getting and provide us That of timeframe supply investor at next positive joining for that should everyone we'll constraints here. good. feel Thanks to in We're us need details lot Thank out you. the behind sending Mike the a time. And be pretty several on quarters, the

Operator

webcast. today's concludes this gentlemen, and Ladies

at lines for participation now this you your disconnect Thank have time. may a great You your day. and

Quantum (QMCO) 10 Aug 212022 Q1 Earnings call transcript