Executive Summary

Nexsan returned to profitability in Q1 2018, driving a sharp improvement in consolidated operating loss to $(1.6)M from $(7.5)M YoY, alongside gross margin expansion to 52.1% (+630 bps YoY), as cost reductions and product mix shifts took hold .
Revenue was $9.4M (-2.1% YoY), largely Nexsan ($9.3M); asset management contributed $0.1M as GBAM begins to generate fees, but the segment remained loss-making in the quarter .
Management highlighted liquidity of $8.4M in cash and short-term investments at 3/31/18 and estimated 12‑month cash needs of $5–$7M; they expect a $1.2M tax refund within 12 months and indicated cash should cover needs over the next year, with potential for capital raises or asset monetization if needed thereafter .
Near-term catalysts: formal launch of the Nexsan cloud initiative (testing nearing completion; plan to announce in summer), continued Nexsan profitability/margin execution, and incremental asset management AUM wins via new distribution efforts, including Asia JV .

What Went Well and What Went Wrong

What Went Well
- Nexsan turned profitable (segment OI $0.1M), with sequential revenue growth and gross margin improvement, validating turnaround actions; “extremely proud of our Nexsan team… executed on every aspect of our plan” – Danny Zheng .
- Company-level gross margin expanded to 52.1% (+630 bps YoY) on product differentiation and mix shift, notably toward higher-margin services .
- SG&A fell 41.6% YoY to $5.2M and R&D fell to $1.2M as Transporter spend was eliminated and headcount reduced, materially narrowing operating loss .
What Went Wrong
- Consolidated revenue declined 2.1% YoY as sales and marketing investment was scaled back (~33% YoY), constraining topline recovery despite Nexsan improvement .
- Asset Management remained a drag near term: segment OI $(0.9)M and net loss from GBAM Fund activities $(0.1)M despite fee revenue beginning to appear .
- Liquidity remains a watch item: cash/STI $8.4M vs. 12‑month needs of $5–$7M; management may need to raise capital/monetize assets beyond 12 months if asset management profits don’t offset corporate costs as planned .

Financial Results

Metric	Q1 2017	Q3 2017	Q4 2017	Q1 2018
Revenue ($USD Millions)	$9.6	$9.3	$8.8	$9.4
Gross Margin %	45.8%	43.0%	47.7%	52.1%
Operating Income (Loss) - Continuing Ops ($M)	$(7.5)	$(6.3)	$(10.5)	$(1.6)
Diluted EPS – Continuing Ops ($)	$(1.41)	$0.06	$(0.66)	$(0.25)
Net EPS ($)	$(1.90)	$1.60	$(0.70)	$(0.33)

Segment performance

Segment Metric	Q3 2017	Q4 2017	Q1 2018
Revenue – Nexsan ($M)	$9.3	$8.8	$9.3
Revenue – Asset Management ($M)	$0.0	$0.0	$0.1
Operating Income – Nexsan ($M)	$(2.5)	$(1.6)	$0.1
Operating Income – Asset Mgmt ($M)	$(1.2)	$(1.4)	$(0.9)
Operating Income – Corp/Unallocated ($M)	$(2.6)	$(1.0)	$(0.8)
Gross Margin – Nexsan	43.0%	47.7%	51.6%

KPIs and balance sheet highlights

KPI	Q3 2017	Q4 2017	Q1 2018
Days Sales Outstanding	67	60	45
Days of Inventory Supply	136	93	85
Cash + Short-term Investments ($M)	$18.4	$9.5	$8.4
Capital Spending ($M)	$0.3	$0.2	$0.2
Employee Count	145	120	120

Note on estimates: S&P Global consensus estimates for GLAE were unavailable for Q1 2018 due to missing mapping; therefore, comparisons vs. Street estimates are not provided.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Nexsan profitability	Q1 2018	“Expect Nexsan… improved, if not profitable, in Q1 2018”	Achieved: Nexsan OI $0.1M and GM 51.6%	Achieved prior target
Cloud initiative	2018	“Next significant evolution of Assureon… underway”	Product testing near completion; plan to announce during summer	Timeline specified
Liquidity needs	Next 12 months	N/A	~$5–$7M cash needs; cash/STI $8.4M at 3/31/18; expect $1.2M tax refund within 12 months	New disclosure
AMT tax refund timing	2019–2020	50% in H1’19; 50% in H1’20 (no amount provided)	Expect $1.2M within next 12 months (implies partial collection earlier)	Updated timing/amount context
Formal revenue/EPS guidance	2018	None provided	None provided	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2017, Q4 2017)	Current Period (Q1 2018)	Trend
Nexsan turnaround, margins	Q3: GM 43.0%, OI $(2.5)M; Q4: GM 47.7%, OI $(1.6)M; cost cuts, leadership changes, “expect Q1 profitable”	Nexsan profitable; GM 51.6% (segment), company GM 52.1%	Improving execution
Cloud/Assureon strategy	Q4: “Next significant evolution… underway”	Testing near completion; plan to announce in summer; “tremendous growth opportunity”	From concept to imminent launch
Asset management (GBAM)	Q3: vehicle launched; $1.0M gains; first third-party client	YTD proprietary gains $1.1M since launch; initial fees; Asia JV and broader distribution underway	Gradual build-out
Cost structure	Q3/Q4: SG&A down; headcount reductions	SG&A down 41.6% YoY; R&D down on Transporter exit	Sustained discipline
Liquidity/Legal	Q3: favorable settlements boosted discontinued ops; cash/STI $18.4M	Cash/STI $8.4M; 12‑month needs $5–$7M; $1.2M refund expected	Tighter but manageable 12‑month runway

Management Commentary

“Nexsan has returned to profitability in the first quarter of 2018… we significantly reduced operating cost, we also grew revenue and improved gross margin from Q4 2017… [and] begun to execute on our innovative approach to managing and protecting cloud storage” – Danny Zheng, Interim CEO .
“Our goal [is] building a profitable publicly traded asset management company… we seeded the first investment vehicle… Since launch, we have experienced a gain of $1.1 million on our proprietary investments” – Daniel Strauss, COO .
“Product testing of the first phase of our cloud strategy is nearing complete, and we plan to announce this during summer” – Danny Zheng .
“Our liquidity needs for the next 12 months is estimated at approximately $5 million to $7 million… we also expect to receive $1.2 million tax refund in the next 12 months” – Danny Zheng .

Q&A Highlights

The transcript includes prepared remarks and then opened for questions; no analyst Q&A content was transcribed or provided in the document .
Key clarifications from management remarks included: near-term cloud product launch timing (summer), detailed 12‑month liquidity plan and expected tax refund, and the pathway toward asset management revenue growth through new distribution channels .

Estimates Context

Wall Street consensus (S&P Global) for Q1 2018 revenue and EPS was unavailable for GLAE; as a result, we cannot provide vs-consensus comparisons for this quarter. Coverage for OTC-listed microcaps can be limited, and SPGI mapping for GLAE was not available at query time.

Key Takeaways for Investors

Nexsan’s profitability and margin trajectory are the core of near-term equity value; sustaining >50% GM and positive segment OI is the key performance indicator to monitor .
Operating leverage is visible: with SG&A down 41.6% YoY and R&D cuts completed, modest revenue stabilization can materially narrow losses at the consolidated level .
Liquidity appears adequate for 12 months, but beyond that, asset management profitability or external capital/asset monetization may be needed; track tax refund timing and any financing actions .
The cloud/Assureon initiative is an identifiable catalyst; confirmation of launch and early customer traction could re-rate expectations on growth and mix .
Asset management provides optionality; initial fees and proprietary gains are encouraging, but meaningful AUM ramps typically take 3–12 months—watch for institutional mandates, particularly via Asia JV and digital distribution partners .
Absent Street estimates, stock reaction may hinge on narrative catalysts (cloud launch, Nexsan profitability durability, financing clarity) and reported KPIs (GM, DSO, inventory turns) rather than beat/miss optics .

All citations: Q1 2018 8-K and press release –; Q1 2018 earnings call transcript –; Prior quarters press releases Q4 2017 – and Q3 2017 –.

GlassBridge Enterprises, Inc. (GLAE)·Q1 2018 Earnings Summary