Executive Summary

Q1 FY2026 revenue of $64.286m declined 11% YoY and was down from Q3 FY2025; gross margin compressed to 35.3% on higher inventory provisions and import tariffs, driving adjusted EBITDA to -$6.5m and adjusted EPS to ($1.58) . Versus S&P consensus, revenue ($70.069m*) and EPS (−$0.435*) both missed materially as tariffs and EoL inventory provisioning weighed on profitability (see Estimates Context) .
Management guided Q2 FY2026 revenue to $61m ± $2m, non-GAAP OpEx to $27m ± $2m, adjusted EPS of ($0.26) ± $0.10, and adjusted EBITDA ≈ breakeven, signaling aggressive cost actions flowing through despite modest top-line outlook .
Balance sheet/liquidity actions: revolver fully repaid and terminated; ~$83m raised via SEPA with Yorkville; term debt $104.3m; net debt trimmed to ~ $66.8m; company expects progress on term-debt restructuring before next call .
Governance/controls backdrop: CFO resigned; Q1 10-Q filing was delayed (Nasdaq notice) and company is finalizing a Q3 FY2025 restatement expected to reduce revenue by ~$3.9m; management reiterated no indication of fraud .

What Went Well and What Went Wrong

What Went Well
- Executed liquidity and deleveraging steps: revolver balance taken to $0 at quarter-end and facility terminated; cash and restricted cash increased to $37.5m; net debt reduced >40% vs FY2025 end through SEPA proceeds .
- Clear cost-down trajectory: non-GAAP OpEx was ~$30.0m in Q1 with Q2 guided to ~$27m ± $2m; Q2 adjusted EBITDA targeted at breakeven as restructuring benefits materialize .
- Commercial/product focus sharpened under new CEO: push to re-accelerate DXi (all-flash dedupe launch), reinvigorate StorNext (Ethernet IP), and expand ActiveScale cold storage positioning for AI-era archiving; channel restructuring underway, especially in APAC .
- Quote: “We are strengthening our financial foundation, sharpening sales execution, deepening our partner ecosystem and innovating across our portfolio… I’m confident in our path” — CEO Hugues Meyrath .
What Went Wrong
- Top-line and profitability underperformed: revenue fell to $64.286m and gross margin dropped to 35.3% on higher inventory provisions and import tariffs; adjusted EBITDA negative $6.504m .
- Consensus miss: Q1 revenue and EPS (adjusted) were below S&P Global consensus; only two estimates contributed, but the magnitude of the miss was significant (see Estimates Context) .
- Controls/filing overhang: delayed 10-Q led to Nasdaq notice; pending restatement of Q3 FY2025 revenues (~$3.9m decrease) maintained uncertainty, though no fraud indicated; CFO resignation adds transition risk .

Financial Results

Financial overview (USD, $ millions unless noted; periods oldest → newest)

Metric	Q3 FY2025	Q4 FY2025	Q1 FY2026
Revenue	$72.551	$59.694*	$64.286
Gross Margin %	43.8%	≈44%	35.3%
GAAP Net Loss	$(71.433)	≈$(3.5)	$(17.206)
Adjusted EPS (non-GAAP)	$(0.81)	N/A	$(1.58)
Adjusted EBITDA	$4.715	N/A	$(6.504)

Note: Q4 FY2025 revenue shown as S&P Global “actual.” Values with asterisk are from S&P Global consensus feed and may reflect subsequent updates; see Estimates Context.

Revenue mix (Q1 YoY)

Revenue Mix ($m)	Q1 FY2025	Q1 FY2026
Product	$42.652	$37.535
Service and subscription	$26.711	$24.943
Royalty	$2.902	$1.808
Total	$72.265	$64.286

KPIs and balance sheet (Q1 FY2026)

KPI	Q1 FY2026
Backlog (approx.)	~$10.0
Cash, cash equivalents & restricted cash	$37.547
Term loan debt (end of Q1)	$104.3
Revolving credit facility (end of Q1)	$0.0
Early termination fee paid (revolver)	$1.2
Net debt (approx.)	~$66.8
Interest expense (Q1)	$6.516
GAAP OpEx	$35.308
Non-GAAP OpEx	~$30.0
Weighted avg shares (Q1)	9.187m

Important cross-reference: Non-GAAP adjusted EPS in narrative compares to ($1.59) in Q1 FY2025, while the reconciliation table shows ($1.57); we anchor on the reconciliation table for precision .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q2 FY2026	N/A	$61m ± $2m	New
Non-GAAP OpEx	Q2 FY2026	N/A	$27m ± $2m	New
Adjusted EPS (non-GAAP)	Q2 FY2026	N/A	$(0.26) ± $0.10 (assumes ~13.3m shares)	New
Adjusted EBITDA	Q2 FY2026	N/A	≈ Breakeven	New
Effective tax rate	FY assumption	N/A	~3%	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY2025 and Q4 FY2025)	Current Period (Q1 FY2026)	Trend
AI/data growth & cold storage	Strength in ActiveScale cold storage; multi‑PB deals; subscription ARR up 29% YoY; positive adj. EBITDA; fed wins	Emphasis that AI/data explosion drives tape/cold storage; ActiveScale + Scalar i7 Raptor positioned for lowest-cost long‑term archive	Sustained focus; greater urgency on execution
DXi all‑flash dedupe	First-to-market messaging; strong wins; competitive edge vs incumbents; Q3 adj. EBITDA +$4.7m	New DXi T‑Series 1U all‑flash launch; push harder due to underperformance; retooling lead-gen/sales comp/enterprise channel	From momentum to execution fix
StorNext (Ethernet IP)	Running at historical highs in media & sports	Reinvesting; pushing Ethernet IP client; up to 90 GB/s aggregate read	Reinvigoration underway
Supply chain/tariffs	Caution on tariffs, lead times; Q4 prelim gross margin ≈44%	Tariffs and EoL inventory provisioning hurt Q1 GM to 35.3%	Adverse impact in Q1
Federal/government	Best Fed year since FY2022; YoY Fed +54%	Not specific in Q1, but sales discipline and partner focus highlighted	Prior strength; focus shifts to channel discipline
Debt/liquidity	SEPA in place; goal to become debt‑free	Revolver repaid/terminated; ~$83m raised; term‑debt restructuring expected before next call	Material progress; restructuring catalyst pending
Governance/filings	N/A	CFO resignation; delayed 10‑Q (Nasdaq notice); Q3 FY2025 restatement expected (−$3.9m revenue) with no fraud indicated	Transitional; control remediation focus

Management Commentary

Strategy and tone: “We are restructuring teams to align with our growth model... placing a greater focus on our channel partners... bringing in new partners that specialize in data protection and cybersecurity” .
Product direction: “We launched two new DXi T Series models... industry’s first 1U all‑flash deduplication appliances... ActiveScale cold storage and the Scalar i7 Raptor... anchoring our long-term archive strategy” .
Financial/liquidity: “We raised approximately $83,000,000 in new capital... expect... to announce something more definitive [on term‑debt restructuring] before our next earnings call” .
CEO framing: “Our focus... comes down to three things, integrity, ownership and urgency. We will do what we say... and move quickly to achieve results” .

Q&A Highlights

Product focus and portfolio mix: Management will “push DXi hard” and sees “great” opportunity in cost‑efficient cold storage; StorNext underinvested and shifting to Ethernet IP to match channel/customer demand .
OpEx cadence: Non‑GAAP OpEx expected to decline by ~$3m QoQ in Q2 as restructuring benefits materialize; some Q1 expenses won’t repeat .
Gross margin outlook: Q2 gross margins expected to be more in line with FY2025 Q2, with mix sensitivity to hyperscaler; Q1 GM depressed by EoL inventory provision and tariffs .
Debt/filings: 10‑Q “will be filed shortly”; term‑debt interest/PIC details to be in the 10‑Q; continued progress towards debt restructuring .
Sales execution: Lead-gen to conversion “not that great”; consolidating sales/marketing, changing compensation, building enterprise channel for DXi .

Estimates Context

Q1 FY2026 versus S&P Global consensus: Revenue $64.286m actual vs $70.069m estimate*; adjusted EPS $(1.58) actual vs $(0.435) estimate*. This reflects a material top‑ and bottom‑line miss as tariffs and inventory provisions compressed margins despite cost controls .
Trailing context: Q3 FY2025 revenue $72.551m vs $72.0m estimate* (slight beat); Q4 FY2025 revenue $59.694m actual* vs $65.85m estimate* (miss) — note company also issued Q4 prelim of $65–$67m ahead of later updates .
Estimate breadth: Only two estimates contributed for EPS and revenue in these periods, which can amplify variance conclusions.
Values retrieved from S&P Global (denoted with asterisk).

Q1 FY2026 consensus and actual (S&P Global; USD)

Metric	Estimate*	Actual*
Revenue	70,069,000*	64,286,000*
Primary EPS	-0.435*	-1.58*
EBITDA	2,950,000*	-9,141,000*

Company-reported adjusted EBITDA for Q1 FY2026 was -$6.504m (definition differs from S&P EBITDA) .

Key Takeaways for Investors

Q1 reset: Revenue shortfall and gross margin compression (tariffs, EoL provisioning) drove a significant EPS miss vs consensus; near‑term trading likely hinges on confidence in Q2 OpEx delivery and margin normalization .
Cost actions are the bridge: Q2 guide targets breakeven adjusted EBITDA on ~$61m revenue, contingent on OpEx cuts and mix; execution on cost-downs is the key near‑term catalyst .
Liquidity and capital structure improving: Revolver eliminated, cash bolstered via SEPA, and a term‑debt restructuring update is expected before next call — a clear potential stock catalyst .
Product/operator story: New CEO is refocusing on sales discipline and channel productivity, pushing DXi all‑flash dedupe, ActiveScale cold storage, and StorNext Ethernet IP — watch for pipeline conversion evidence in Q2–Q3 .
Control/filings overhang remains: Timely 10‑Q filing and completion of the Q3 FY2025 restatement (−$3.9m revenue) should reduce uncertainty; no fraud indicated, but governance cleanup is a gating factor for multiple expansion .
Mix watch: Hyperscaler and product mix could swing gross margins; management flagged sensitivity — monitor revenue composition as a driver of profitability .
Setup: Near‑term risk/reward tilts to execution on OpEx curtailment and debt restructuring; medium‑term thesis depends on converting AI‑era archive demand and DXi momentum into sustainable revenue growth and mid‑30s to 40% gross margins.

Appendix: Q1 FY2026 vs Consensus (selected figures)

Revenue: $64.286m actual vs $70.069m estimate* .
Adjusted EPS: $(1.58) actual vs $(0.435) estimate* .
Adjusted EBITDA: $(6.504)m company-reported vs $2.95m EBITDA estimate* (different definitions) .

Values retrieved from S&P Global (denoted with asterisk).

QUANTUM CORP /DE/ (QMCO)·Q1 2026 Earnings Summary