Quantum announces fiscal second quarter 2017 results

Quantum reported results for the fiscal second quarter 2017 that ended 30 September 2016 (all comparisons are relative to the fiscal second quarter 2016 unless otherwise stated) :

• Total revenue was $134.7 million, an increase of $17.7 million.
• Scale-out storage revenue grew to a record $46.7 million, up from $29.9 million and the 21st consecutive quarter of year-over-year growth.
• Total data protection revenue was flat at $78.5 million, consisting of $18.7 million in disk backup systems revenue (up 3 per cent), $45.2 million in tape automation revenue (down 7 per cent) and $14.6 million in devices and media revenue (up 26 per cent).
• Royalty revenue was $9.5 million, an increase of 9 per cent.
• GAAP gross margin was 41.2 per cent, and non-GAAP gross margin was 41.4 per cent, up from 39.6 per cent and 39.9 per cent, respectively.
• GAAP operating income was $5.3 million, and non-GAAP operating income was $7.5 million, an improvement of $15.0 million and $13.3 million, respectively.
• GAAP net income was $3.8 million, or $0.01 per diluted share, and non-GAAP net income was $6.0 million, or $0.02 per diluted share. This represented an improvement of $0.05 per diluted share on both a GAAP and non-GAAP basis.

Extending media & entertainment leadership

“We began this fiscal year with a clear focus on delivering solid growth and profitability, and our results in the first two quarters demonstrate our strong execution and increasing momentum,” said Jon Gacek, president and CEO of Quantum. “For the first half of the fiscal year, we’ve increased total revenue by $23 million over the same period last year, growing scale-out storage by 34 per cent and data protection — where the market remains challenging — by 3 per cent. On this $23 million of additional revenue, we’ve improved net income by more than $20 million, reflecting the significant leverage our financial model provides as we grow.”

“As we start the second half of fiscal 2017, we’re focused on continuing to drive scale-out storage growth by further extending our media and entertainment leadership and expanding our footprint in video surveillance and in technical workflows with large unstructured data archive needs. For data protection, we’re continuing to leverage our technology leadership, extensive customer base, and channel and technology partnerships to generate profit and cash.”

Fiscal third quarter 2017 outlook

Quantum provided the following guidance for the fiscal third quarter:

• Total revenue of $125 million to $130 million.
• GAAP and non-GAAP gross margin of 41-43 per cent.
• GAAP and non-GAAP operating expenses of $49 million to $51 million and $47 million to $49 million, respectively.
• Interest expense of $2.4 million and taxes of $400,000.
• GAAP loss per share of $0.01 to GAAP earnings per share of $0.01 and non-GAAP earnings per share of $0.00 to $0.02.

Fiscal second quarter 2017 business highlights

Quantum announced a new media reference architecture for animation and visual effects workflows that is built on the company’s award-winning Xcellis high-performance storage. This architecture overcomes the time- and resource-consuming challenge of transferring content between animation and editorial departments over a network by optimising storage capabilities for both operations in a single shared environment, thereby streamlining workflows and boosting overall efficiency and productivity.

• The company introduced the DXi6900-S, the first deduplication appliance to incorporate 8TB self-encrypting drives, delivering the highest density backup available and enabling customers to reduce power consumption by 50 per cent, compared to competing deduplication appliances. It also integrates the latest SSD technology to provide metadata storage and access. As a result, the DXi6900-S dramatically speeds ingest, read, replication and space reclamation performance, allowing users to complete all these tasks several times faster than with previous DXi systems and numerous competitive products.
• Continuing to expand its ecosystem partnerships in video surveillance, Quantum announced joint development initiatives with four industry-leading Video Management System (VMS) providers — Aimetis Corp., On-Net Surveillance Systems Inc. (OnSSI), Qognify and Verint Systems Inc. Under the initiatives, these partners have certified interoperability with Quantum multi-tier storage offerings, including StorNext 5 data management and QXS hybrid storage, ensuring that users have access to thoroughly tested and integrated storage solutions suited to their unique environment.
• Key scale-out storage customer wins included million dollar-plus deals with a major media company for a multi-faceted project and a global consumer electronics company for corporate video, as well as large deals with a leading car company using video surveillance in its manufacturing facility and a solar company that uses surveillance for product line quality control. Other notable scale-out storage wins included large deals involving technical workflows and management of unstructured data archives at a U.S. military agency, an electric power administrator and a global laboratory testing services provider.
• In data protection, major customer wins included million dollar-plus deals at a European banking IT support operation, a large supermarket chain and a U.S. government department, with the first two involving Quantum’s new DXi6900-S deduplication appliance.