QC
QUANTUM CORP /DE/ (QMCO)·Q4 2025 Earnings Summary
Executive Summary
- Q4 FY2025 was disrupted by delayed filings and a revenue recognition review; management only issued preliminary Q4 targets (revenue $65–$67M, ~44% gross margin, GAAP net loss ~$3.5M) and later filed the FY2025 10‑K with restated quarterly data; based on the 10‑K and restated nine-months, Q4 revenue calculates to ~$61.3M, below the $66M guidance midpoint .
- Against Wall Street consensus, Q4 revenue missed ($65.85M est vs ~$61.26M actual)* and EPS was not formally disclosed for Q4; management’s prior guide implied non‑GAAP EPS of about ($1.16), in line with the consensus EPS est of ($1.17)* .
- Transformation initiatives showed progress in Q3 (ARR +29% YoY to $21.3M, gross margin 43.8%, adjusted EBITDA +$4.7M), but supply chain and factory transition headwinds, plus accounting review, weighed on Q4 trajectory .
- Leadership turnover (CFO resignation) and credit facility termination heightened uncertainty, but debt paydown and SEPA capital access aim to support liquidity and eventual debt reduction .
What Went Well and What Went Wrong
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What Went Well
- Subscription ARR momentum: Q3 subscription ARR rose 29% YoY to $21.3M, with over 90% of new unit sales subscription-based .
- Product wins: DXi all‑flash and i7 tape secured multi‑million-dollar deals; ActiveScale expanded >10PB at a Japanese institute; strong federal demand (+54% YoY) supported mix and margins .
- Margin and EBITDA improvement: Q3 gross margin expanded to 43.8% and adjusted EBITDA hit $4.715M, a $5M sequential improvement .
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What Went Wrong
- Q4 revenue shortfall vs guidance: Preliminary Q4 guide ($66M ±$2M) contrasted with calculated Q4 revenue of ~$61.3M from the 10‑K; estimate miss likely tied to supply chain and factory consolidation timing .
- Restatement and controls: FY2025 included restatement of Q3 and identification of material weaknesses in internal controls; delays triggered Nasdaq notices and increased compliance costs .
- Elevated financing costs: Interest expense rose materially; warrant liability mark‑to‑market created large non‑cash losses, depressing GAAP EPS optics in Q3 .
Financial Results
Quarterly performance vs prior periods and consensus
Values marked with * retrieved from S&P Global.
Revenue composition (where disclosed)
Key KPIs
Implications:
- Q4 revenue missed both guidance and consensus; gross margin resiliency suggests mix and royalty support but conversion headwinds from supply chain/factory transition likely weighed on top line .
- GAAP EPS optics remain noisy due to warrant liability marks; non‑GAAP metrics better reflect core operations in Q3 .
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- “We finished Q3 '25 with $72.6 million in revenue, GAAP gross margin of 43.8%... and adjusted EBITDA of positive $4.7 million... driven by a higher‑value product mix and a large U.S. federal deal.”
- “Subscription ARR increased 29% year‑over‑year to $21.3 million with over 90% of new unit sales in the quarter on subscription.”
- On supply chain and tariffs: “We are beginning to manufacture the new i7 product… parts are just long lead time… we have had concerns of what happens if tariffs are turned on/off... so far, it's been smooth sailing, but... geopolitical stuff.”
- On DXi differentiation: “There just are not major storage vendors that have [all‑flash dedup] technology available today… we’re just taking share.”
Q&A Highlights
- Liquidity/SEPA: Management emphasized flexibility to access capital, Board‑directed usage, and debt reduction goals; timing not yet announced .
- Supply chain conversion: Longer SSD/server lead times and factory consolidation at quarter‑end tempered March quarter conversion despite bookings .
- Federal momentum: Best Fed year since FY’22; +54% YoY, with allied nation copy‑systems driving follow‑on demand .
- OpEx trajectory: Non‑GAAP OpEx guided to ~$30M/quarter; majority of cost actions substantially complete .
- Product pipeline: Strong DXi acceleration; Myriad scaling from small base; StorNext up ~50% YoY .
Estimates Context
- Q4 FY2025 revenue missed consensus: $65.85M est vs ~$61.26M actual derived from FY and restated nine‑months data ; $65.85M est value retrieved from S&P Global*.
- EPS: Consensus Primary EPS mean ($1.17)* aligned with management’s non‑GAAP guide of ($1.16), but Q4 EPS was not disclosed due to filing delays .
- EBITDA: Consensus ~$1.7M* matched guidance, but actual Q4 adjusted EBITDA not disclosed.
Values marked with * retrieved from S&P Global.
Key Takeaways for Investors
- Q4 revenue miss vs guidance/consensus, driven by conversion timing (supply chain/factory transition) and reporting delays—expect near‑term estimate cuts and elevated execution risk until filings stabilize .
- Q3 operating improvements (margin, ARR, adjusted EBITDA) validate product mix/pricing strategy; watch sustainability as supply chain normalizes and i7/DXi volumes ramp .
- Liquidity actions (SEPA, revolver termination) reduce near‑term financing risk but dilution remains possible; monitor debt paydown cadence and interest expense trajectory .
- Control remediation is critical: restatement/material weaknesses increase compliance costs and headline risk; successful remediation and timely filings are key catalysts .
- Federal and hyperscaler demand provide durable order book visibility; product differentiation (DXi all‑flash dedup, i7 density, ActiveScale cold storage) underpins margin support .
- Trading setup: Near term, sentiment sensitive to filing cadence and any updated outlook; medium term, thesis hinges on recurring revenue scale, cost discipline (~$30M quarterly OpEx), and debt reduction translating to positive FCF .
Sources
- 8‑K and 10‑K filings: restatement, liquidity actions, internal control weaknesses .
- Q2 and Q3 FY2025 press releases and transcripts: revenue, margins, ARR, guidance, product and federal momentum .
- Preliminary Q4 FY2025 press release: revenue $65–$67M, ~44% GM, GAAP net loss ~$3.5M .
- Nasdaq notices and filing updates .
Values marked with * retrieved from S&P Global.