Q4 2024 Quantum Corp Earnings Call

Operator: Welcome to Quantum's fiscal full year 2024 financial results and business update conference call. At this time, all participants are in a listen-only mode.

Welcome to Quantum's fiscal full year 2024 financial results and business update conference call.

Operator: Welcome to Quantum's fiscal full year 2024 financial results and business update conference call. At this time, all participants are in a listen-only mode.

Speaker Change: At this time all participants are in a listen only mode.

Operator: A brief question and answer session. We'll follow the formal presentation. If anyone should require operator assistance during the conference call, please call 1-866-422-4232 and press star zero on your telephone keypad.

Operator: A brief question and answer session will follow the formal presentation. If anyone should require operator systems during the conference, please press star zero on your telephone keypad. Please note this conference call is being recorded for replay purposes.

Speaker Change: A question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Speaker Change: Please note. This conference call is being recorded for replay purposes.

Brian Cabrera: I will now turn the conference over to Brian Cabrera, Quantum's Chief Administrative Officer. Thank you. Good afternoon and thank you for joining today's conference call to discuss Quantum's fiscal 2024 financial results. I'm Brian Cabrera, Quantum's Chief Administrative Officer.

Operator: Please note, this conference call is being recorded for replay. I will now turn the conference over to Brian Cabrera, Quantum's Chief Administrative Officer. Good afternoon, and thank you for joining today's conference call to discuss Quantum's fiscal 2024 financial results. I'm Brian Cabrera, Quantum's Chief Administrative Officer.

Speaker Change: I will now turn the conference over to Brian Cabrera, Quantum's, Chief administrative officer. Thank you.

Brian Cabrera: Good afternoon, and thank you for joining today's conference call.

Brian Cabrera: To discuss quantum's fiscal 2024 financial results.

Brian Cabrera: Ryan Cabrera Quantum's, Chief administrative officer.

Brian Cabrera: Speaking first today is Jamie Lerner, our Chairman and CEO, followed by Ken Gianella, our CFO. We'll then open the call to questions from analysts.

Brian Cabrera: Speaking first today is Jamie Lerner, our chairman and CEO, followed by Ken Gianella, our CFO. We'll then open the call to questions from analysts. Some of our comments during the call today may include forward-looking statements. All statements, other than statements of historical fact, should be viewed as forward-looking, including any projections of revenue, margins, expenses, adjusted EBITDA, adjusted net income, cash flows, or other financial, operational, or performance topics. These statements involve known and unknown risks and uncertainties, which we refer to as risk factors.

Brian Cabrera: Speaking first today is Jamie Lerner car, chairman and CEO, followed by Ken GNL.

Brian Cabrera: Risk factors may cause our actual results to differ materially from our forecast. The results reported in this CERNing call are preliminary and unaudited and are subject to change. As previously disclosed, the company is in the process of restating its previously issued results for its audited consolidated financial statements for the fiscal years ended March 31, 2023 and March 31, 2022, contained in its annual reports on Form 10-K. Unaudited Interim Condensed Consolidated Financial Statements for each of the first three quarters in such years contained in its quarterly reports on Form 10-Q, and Unaudited Interim Condensed Consolidated Financial Statements for the Fiscal Quarter End ended June 30, 2023, contained in its quarterly report on Form 10-Q, the Restatement.

Our CFO.

Speaker Change: We will then open the call to questions from analysts.

Brian Cabrera: Some of our comments during the call today may include forward-looking statements. All statements other than statements of historical fact should be viewed as forward-looking, including any projections of revenue, margins, expenses, adjusted EBITDA, adjusted net income, cash flows, or other financial, operational, or performance topics. These statements are well-known and unknown risks and uncertainties we refer to as risk factors. Risk factors may cause our actual results to differ materially from our forecast.

Brian Cabrera: The company has not yet completed its annual financial close process for the fiscal 2024 fourth quarter and full year, and its independent auditors have not completed their audit of the company's financial statements for the fiscal 2024 full year. In addition, the company is in the process of completing the financial close process for the restatement, and its independent auditors have not completed their audit and applicable reviews of the restatement.

Speaker Change: Some of our comments during the call. Today may include forward looking statements all statements other than statements of historical fact should be viewed as forward looking including any projections of revenue margins expenses adjusted EBITDA adjusted net income cash flows or other finance.

Brian Cabrera: The financial results in this earnings report do not present all necessary information for a full understanding of the company's results of operations for the fiscal 2024 fourth quarter and full year, as well as the financial statements that will be included in the restatement. As the company completes its financial close process and finalizes its financial statements for the fiscal 2024 fourth quarter and full year, as well as for the restatement, and as its independent auditors complete their audit of the company's financial statements for the fiscal 2024 full year and complete their applicable audit and reviews of the restatement, it is possible the company may identify items that require adjustments to the preliminary financial information set forth in this earnings report, and those changes could be

Brian Cabrera: The company is in the final stages of confirming the revised financial results to be reflected in the restatement and expects to file its current financial results as well as its restated results in a superform 10-K. We do not intend to update such financial information prior to the filing of the superform 10-K. For more information, please refer to the detailed descriptions we provide about these and additional risk factors under the Risk Factors section in our 10-Qs and 10-K We do not intend to update or alter our forward-looking statements once they are issued, whether as a result of new information, future events, or otherwise, except, of course, as we are required by applicable law.

Brian Cabrera: Please note that our press release and the management statements we make during today's call will include certain financial information in GAAP and non-GAAP measures. We include definitions and reconciliations of GAAP to non-GAAP items in our press release. Now, I would like to turn the call over to our Chairman and CEO, Jamie Lerner. Thank you, Brian, and thank you all for joining us.

Operational performance topics.

Speaker Change: These statements involve known and unknown risks and uncertainties, we referred to as risk factors risk factors may cause our actual results to differ materially from our forecast.

Brian Cabrera: The results reported in this statement previously issued results for its consolidated financial statements for the fiscal years ended March 31, 2023, and March 31, 2022, contained in its annual reports on Form 10-K. Unottited interim condensed consolidated financial statements for each of the first three quarters of such years contained in its quarterly reports on Form 10-K. And unottited interim condensed consolidated financial statements for the fiscal quarter end and June 30, 2023, contained in its quarterly report on Form 10-K, the restatement. The company has not yet completed its annual financial closed process for the fiscal 2024 fourth quarter and full year.

Speaker Change: The results reported in this earnings call are preliminary and unaudited and are subject to change as previously disclosed the company is in the process of restating. Its previously issued results for its audited consolidated financial statements for the fiscal years ended March 31 2022.

Speaker Change: At March 31 2022.

Speaker Change: And in its annual reports on Form 10-K.

Speaker Change: I know how to do the interim condensed consolidated financial statements for each of the first three quarters of such in such a year's contained in its quarterly reports on Form 10-Q.

James Lerner: Earlier today, we announced in an earnings release our full-year results for fiscal 2024, and we are pleased to be back talking to all of our stakeholders live. We truly appreciate investors' patience and support, acknowledging the extended period during which the company was not able to comment on our ongoing business performance and conditions. The re-evaluation was done in conjunction with the top consultants in the industry.

Speaker Change: Unaudited interim condensed consolidated financial statements for the fiscal quarter and ended June 30th 2023 contained in its quarterly report on Form 10-Q, the restatement.

James Lerner: And we took a fresh look at everything, including analyzing hundreds of thousands of transactions over the last five years. Before Ken walks through the specific change in methodology and details of the associated adjustments. I would like to acknowledge that while this process was a time-consuming and expensive project to undertake, this should reinforce to our stakeholders that Quantum holds itself to the highest standards to ensure our financial reporting methodologies are correct, compliant, and reflect the company's current and future business outlook.

Speaker Change: The company has not yet completed its annual financial close process for the fiscal 2020 for fourth quarter and full year.

Brian Cabrera: And its independent auditors have not completed their audit of the company's financial statements for the fiscal 2024 full year. In addition, the company is in the process of completing the financial closed process for the restatement, and its independent auditors have not completed their audit and applicable reviews of the restatement.

Speaker Change: And its independent auditors have not completed their audit of the company's financial statements for the fiscal 2020 for full year.

Speaker Change: In addition, the company is in the process of completing the financial close process for the restatement and its independent auditors have not.

Speaker Change: Completed their audit and applicable reviews of the restatement.

Brian Cabrera: The financial results in this earnings report do not represent all necessary information for all understanding of the company's results of operations for the fiscal 2024 fourth quarter and full year, as well as the financial statements that will be included in the restatement. Management. As the company completes its financial closed process and finalizes its financial statements for the fiscal 2024 fourth quarter and full year, as well as for the restatement.

Financial results in this earnings report do not represent do not present, all necessary information for all understanding of the company's results of operations for the fiscal 2020 for fourth quarter and full year as well as the financial statements that will be included in the restatement.

Speaker Change: As the company completes his financial close process and it finalizes its financial statements for the fiscal 2020 for fourth quarter and full year as well as for the restatement and as the independent auditors complete their audit of the company's financial statements for the fiscal 2024.

Brian Cabrera: And as its independent auditors complete their audit of the company's financial statements for the fiscal 2024 full year and complete their applicable audit and reviews of the restatement, it is possible the company may identify items that require adjustments to the preliminary financial information set forth in this earnings report, and those changes could be material. The company is in the final stages of confirming the revised financial results to be reflected in the restatement and expects to file its current financial results as well as its restated results in a Form and a Super Form 10-K. We do not intend to update such financial information prior to the filing of the Super Form 10-K.

Speaker Change: Full year and complete their applicable audits and reviews of the restatement. It is possible. The company may identify items that require adjustments to the preliminary financial information set forth in this earnings report and those changes could be material.

Speaker Change: The company is in the final stages of confirming never revised financial results to be reflected in the restatement and expects to file its current financial results as well as its restated results in a form and a super Form 10-K.

Speaker Change: We do not intend to update such financial information prior to the filing of the Super Form 10-K.

Brian Cabrera: For more information, please refer to the detailed descriptions we provide about these and additional risk factors under the risk factors section in our 10-Qs and 10-K filed with the Securities and Exchange Commission. We do not intend to update or alter our forward-looking statements once they are issued, whether as a result of new information, future events, or otherwise, except, of course, as we are required by applicable law.

Speaker Change: For more information please refer to the detailed descriptions we provide about these and additional risk factors under the risk factors section in our 10, Qs and 10-K filed with the Securities and Exchange Commission, we do not intend to update or alter our forward looking statements. Once they are issued.

Whether as a result of new information future events or otherwise except of course as we are required by applicable law.

Brian Cabrera: Please note that our press release and the management statements we make during today's call will include certain financial information in GAAP and non-GAAP measures. We include definitions and reconciliations of GAAP and non-GAAP items in our press release.

Speaker Change: Note that our press release and managements statements. We make during today's call will include certain financial information in GAAP and non-GAAP measures. We include definitions and reconciliations of GAAP to non-GAAP items in our press release.

Brian Cabrera: Now I would like to turn the call over to our Chairman and CEO, Jamie Lerner. Jamie? Thank you, Brian, and thank you all for joining us. Earlier today, we announced in an earnings release our full-year results for fiscal 2024, and we are pleased to be back talking to all of our stakeholders live. We truly appreciate investors' patience and support, acknowledging the extended period during which the company was not able to comment on our ongoing business performance and conditions.

Speaker Change: Now I would like to turn the call over to our chairman and CEO, Jamie Lerner Jamie.

James Lerner: Thank you, Brian and thank you all for joining US earlier today, we announced it in the earnings release, our full year results for fiscal 2024, and we are pleased to be back talking to all of our stakeholders slot.

Speaker Change: We truly appreciate investors patients and support acknowledging the extended period during which the company was not able to comment on our ongoing business performance and conditions.

Jamie Lerner: The re-evaluation was done in conjunction with the top consultants in the industry, and we took a fresh look at everything, including analyzing hundreds of thousands of transactions over the last five years. Before Ken walks through the specific change in methodology and details of the associated adjustments. I would like to acknowledge that while this process was a time-consuming and expensive project to undertake, this should reinforce to our stakeholders that Quantum holds itself to the highest standards to ensure our financial reporting methodologies are correct, compliant, and reflect the company's current and future businesses.

Speaker Change: The reevaluation was done in conjunction with the top consultants in the industry.

Speaker Change: And we took a fresh look at everything including analyzing hundreds of thousands of transactions over the last five years.

Speaker Change: Before I can walk through the specific change in methodology and details of the associated adjustments I.

Speaker Change: I would like to acknowledge that while this process was time consuming and expensive project to undertake this should reinforced to our stakeholders that quantum holds itself to the highest standards to ensure our financial reporting methodologies are correct compliant and reflect the company's current and few.

Speaker Change: Sure business outlook.

Jamie Lerner: Now turning to our operational overview and where the team has been focused since our last public conference call in August. We made it a high priority and initiated several actions to improve the company's capital structure and begin paying down debt. this included working closely with our lenders to ensure sufficient liquidity, as well as focusing on improving our working capital to execute on a renewed path to achieve growth and meaningfully improve operating performance. During this time, we've also continued implementing self-help actions to further streamline our business and sales organization, increase operational efficiencies, and take costs out of the business.

James Lerner: Now turning to our operational overview and where the team has been focused since our last public conference call in August. We made it a high priority and initiated several actions to improve the company's capital structure and begin paying down debt. This included working closely with our lenders to ensure sufficient liquidity as well as focusing on improving our working capital to execute on a renewed path to achieve growth and meaningfully improve operating performance.

Speaker Change: Now turning to our operational overview and where the team has been focused since our last public conference call in August.

Speaker Change: We made it a high priority and initiated several actions to improve the company's capital structure and begin paying down debt.

Speaker Change: This included working closely with our lenders to ensure sufficient liquidity as well as focusing on improving our working capital to execute on a renewed path to achieve growth and meaningfully improve operating performance.

James Lerner: During this time, we've also continued implementing self-help actions to further streamline our business and sales organization, increase operational efficiencies, and take costs out of the business. The initial results from these optimization efforts contributed to gross margin expanding 600 basis points year-over-year and $16 million of total annualized cost savings. Moreover, we have used this time as an opportunity to analyze all aspects of our business and to frame a path forward that will enable us to accelerate future growth from a more stabilized base of legacy business as we scale our new solution offerings with more profitable revenue streams.

Speaker Change: During this time, we've also continued implementing self help actions to further streamline our business and sales organization.

Speaker Change: Kris operational efficiencies and take costs out of the business.

Jamie Lerner: The initial results from these optimization efforts contributed to gross margin expanding 600 basis points year over year and 16 million of total annualized cost savings.

Speaker Change: The initial results from these optimization efforts contributed contributed to gross margin expanding 600 basis points year over year and $16 million of total annualized cost savings.

Jamie Lerner: Moreover, we have used this time as an opportunity to analyze all aspects of our business and to frame a path forward that will enable us to accelerate future growth from a more stabilized base of legacy business as we scale our new solution offerings with more profitable revenue streams. I will expand further on this repositioning and go forward strategy in a few minutes.

Speaker Change: Moreover, we have used this time as an opportunity to analyze all aspects of our business and to frame a path forward that will enable us to accelerate future growth from a more stabilized base of legacy business as we scale, our new solution offerings with more profitable revenue.

Speaker Change: <unk>.

Speaker Change: I will expand further on this repositioning and go forward strategy in a few minutes.

Ken Gianella: But let me first pass the call to Ken to review the results of our reevaluation process and reported financials, as well as full year fiscal 2024 results. Thank you, Jamie. Please turn to slide five, and I'll provide an overview of our efforts and timeline of events to expand on the steps we have taken over the last few quarters.

James Lerner: I will expand further on this repositioning and go forward strategy in a few minutes, but let me first pass the call to Ken to review the results of our re-evaluation process and reported financials, as well as full year fiscal 2024 results. Thank you, Jamie.

Speaker Change: But let me first pass the call to Ken to review the results of our reevaluation process and reported financials as well as full year fiscal 2024 results.

Kenneth Gianella: Thank you Jamie Please turn to slide five and I'll provide an overview of our efforts and timeline of events to expand on the steps we have taken over the last few quarters.

Kenneth Gianella: Please turn to slide five, and I'll provide an overview of our efforts and timeline of events to expand on the steps we have taken over the last few quarters. First, in July 2023, Armagnino, our then-independent public accountant, due to their strategic decision to cease certain services to public companies, advised us as to their resignation. There are no disagreements between Quantum and Armagnino on accounting principles or audit scope.

Kenneth Gianella: We promptly initiated a process to engage a new auditor, and in September 2023, we approved the appointment of Grant Thornton as our new independent registered public accounting firm for the fiscal year ending March 31st, 2024. While working with Grant Thornton on our first filing with them in Fiscal Q2 2024, we identified the need to re-evaluate our historical approach to establishing Stand-alone Selling Price or SSP under ASC Topic 606. This effort was purely an accounting interpretation and an adjustment focused on the application of SSP. During this process, the company found no evidence of intentional misconduct associated with its revenue recognition process.

Ken Gianella: First, in July 2023, Arminino are then independent public accountant due to their strategic decision to see certain services to public companies advised us to the resignation. There are no disagreements between Quantum and Arminino on accounting principles or audit scope. We promptly initiated a process to engage a new auditor, and in September 2023, we approved the appointment of Grant Thornton as our new independent registered public accounting firm for the fiscal year ending March 31, 2024. While working with Grant Thornton on our first filing with them in fiscal Q2 2024, we identified the need to reevaluate our historical approach for establishing standalone selling price or SSP under ASC Topic 606.

Kenneth Gianella: We engaged third-party support to review our prior SSP evaluation and assist in assessing alternative approaches to establishing SSP. As we progressed, we re-engaged Arminino, our prior auditor, to review the analysis of our findings. In May, we completed our evaluation of the past application of standalone selling price. As previously announced, we determined our new process for establishing SSP would materially increase revenue in all restated periods, and these adjustments would decrease the deferred revenue on our balance sheet for the corresponding period.

Speaker Change: First in July 2023, R&D now are then independent public accountant due to their strategic decision to cease certain services to public companies advised us as to the resignation.

James Lerner: There are no disagreements between quantum and Armani now on accounting principles are audit scope, we promptly initiated a process to engage a new auditor and in September 2023, we approved the appointment of grant Thornton as our new independent registered public accounting firm for the fiscal year ending March 31 2024.

Kenneth Gianella: Importantly, these changes did not have an impact on our invoicing, cash flow, or contractual obligations to our customers, and they are purely accounting adjustments. Additionally, through the company's in-depth analysis of its prior financial statements, we identified a series of outstanding warrant agreements issued to our prior and current lenders and concluded that our prior classification of these warrants as equity was inconsistent with ASC Topic 815. Subsequent to this review, we determined the company should classify these warrants as a liability requiring accounting for the associated change in the fair value of the warrants through the income statement. This change in accounting for outstanding warrants has no cash impact.

Kenneth Gianella: Furthermore, this change does not have an impact on the company's ongoing operations or its obligations to prior or current lenders. Turning to slide 6. Because of these accounting changes, we have restated our financial statements for the previously reported period. These include the fiscal years ending March 31st, 2022 and March 31st, 2023, as well as for the first three fiscal quarters of fiscal 2023 and the fiscal first quarter ended June 30th, 2023. As summarized on this slide, for all these periods, net income increased for the restated reporting periods from both the SSP and warrant accounting adjustments. Switching advisors is always an intensive effort.

Speaker Change: While working with grant Thornton on our first filing with them in fiscal Q2, 'twenty 'twenty four we identified the need to reevaluate our historical approach for establishing standalone selling price or SSP under ASC topic 606.

Ken Gianella: This effort was purely an accounting interpretation and an adjustment focused on the application of SSP. During this process, the company found no evidence of intentional misconduct associated with its revenue recognition process. We engaged third party support to review our prior SSP evaluation and assist in assessing alternative approaches to establishing SSP. As we progressed, we re-engaged Arminino, our prior auditor, to review the analysis of our findings. In May, we completed our evaluation of the past application of standalone selling price. As previously announced, we determined our new process for establishing SSP would materially increase revenue in all restated periods, and these adjustments would decrease the deferred revenue on our balance sheet for the corresponding period.

Speaker Change: This effort was purely an accounting interpretation and an adjustment focused on the application of S. S. P.

Speaker Change: During this process the company found no evidence of intentional misconduct associated with its revenue recognition process.

Speaker Change: We engaged third party support to review our prior SSP evaluation and assist in assessing alternative approaches to establishing S. S. P. As we progressed, we re engaged our menino our prior auditors to review the analysis of our findings.

Speaker Change: In May we completed our evaluation of the past application of stand alone selling price as previously announced we determined our new process for establishing SSP would materially increase revenue and all restated periods and these adjustments would decrease the deferred revenue on our balance sheet for the corresponding.

Ken Gianella: Associates. Importantly, these changes did not have an impact on our invoicing, cash flow, or contractual obligations to our customers, and they are purely accounting adjustments. Additionally, the company's in-depth analysis of its prior financial statements, we identified a series of outstanding warrant agreements issued to our prior and current lenders and concluded that our prior classification of these warrants as equity was inconsistent with ASC Topic 815. Subsequent to this review, we determined the company should classify these warrants as a liability, requiring accounting for the associated change in the fair value of the warrants through the income statement.

Speaker Change: Periods.

Speaker Change: Importantly, these changes did not have an impact on our invoicing cash flow our contractual obligations to our customers.

Speaker Change: And they are purely accounting adjustments.

Speaker Change: Additionally, the company's in depth analysis of its prior financial statements. We identified a series of outstanding warrant agreements issued to our prior and current lenders and concluded that our prior classification of these warrants is equity with inconsistent with ASC topic 815.

Speaker Change: Subsequent to this review we determined the company should classify these warrants as a liability requiring accounting for the associated change in the fair value of the warrants through the income statement.

Ken Gianella: This change of accounting for outstanding warrants has no cash impact. Furthermore, this change does not have an impact on the company's ongoing operations or its obligations to prior or current lenders.

Speaker Change: This change of accounting for outstanding warrants has no cash impact. Furthermore, this change does not have an impact to the company's ongoing operations or its obligations to prior or current lenders.

Ken Gianella: Turning to slide 6, because of these accounting changes, we have restated our financial statements for the previously reported periods. These include the fiscal year's ending March 31st, 2022, in March 31st, 2023, as well as for the first three fiscal quarters of fiscal 2023 and the fiscal first quarter ended June 30th, 2023. As summarized on this slide for all these periods, net income increased for the restated reporting periods from both the SSP and warrant accounting adjustments.

Speaker Change: Turning to slide six because of these accounting changes we have restated our financial statements for the previously reported periods.

These include the fiscal years, ending March 31, 2022, and March 31, 2023, as well as for the first three fiscal quarters of fiscal 2023, and the fiscal first quarter ended June 30th 2023.

Speaker Change: As summarized on this slide for all these periods net income crease increased for the restated reporting periods from both the SSP and warrant accounting adjustments.

Ken Gianella: Switching advisors is always an intensive effort. This transition and re-evaluation process has been complex, requiring the company to engage external advisors to assist with reviewing and updating policies, processes, and systems. While this has been a necessary but unfortunate undertaking for our company, we are confident in our path forward, and I assure all of our stakeholders that Quantum is committed to maintaining the highest standards of financial integrity and transparency.

Speaker Change: Switching advisors is always an intensive effort this transition and reevaluation process has been complex requiring the company to engage external advisors to assist with reviewing and updating policies processes and systems.

Kenneth Gianella: This transition and re-evaluation process has been complex, requiring the company to engage external advisors to assist with reviewing and updating policies, processes, and systems. While this has been a necessary but unfortunate undertaking for our company, we are confident in our path forward, and I assure all of our stakeholders that Quantum is committed to maintaining the highest standards of financial integrity and transparency. Now using the restated gap results, I would like to provide some key financial insight into our performance year over year in relation to our Prior Expectations for FY2024. Please turn to slide 7, and I will provide an overview of the financial results for FY2024. Revenue in 2024 was $311.6 million, a decrease of approximately 26% year-over-year.

Unidentified: Well this has been a necessary, but unfortunate undertaking for our company. We are confident in our path forward and I assure all of our stakeholders that quantum is committed to maintaining the highest standards of financial integrity and transparency.

Ken Gianella: Now, using the restated gap results, I would like to provide some key financial insight into our performance year-over-year in relation to our prior expectations for fiscal year 2024. Please turn to the side 7 and I'll provide an overview of the financial results for our fiscal year 2024. Revenue in 2024 was 311.6 million, a decrease of approximately 26 percent year-over-year. This was predominantly related to our largest hyper-scaler and largest customer by revenue, discontinuing new system orders at the end of fiscal Q1 2024. This combined with lower tape media and LTO royalty payments was partially offset by an increase in our primary and active scale solutions.

Speaker Change: Now using the restated GAAP results I would like to provide some key financial insight into our performance year over year in relation to our.

Speaker Change: Prior expectations for fiscal year 2024, please turn to slide seven and I'll provide an overview of the financial results for our fiscal year 2024.

Speaker Change: Revenue in 2024 was $311 6 million a decrease of approximately 26% year over year. This was predominantly related to our largest hyperscale or and largest customer by revenue discontinuing new system orders at the end of fiscal Q1 2024.

Kenneth Gianella: This was predominantly related to our largest hyperscaler and largest customer by revenue discontinuing new system orders at the end of fiscal Q1 2024. This, combined with lower tape media and LTO royalty payments, was partially offset by an increase in our primary and active scale solutions. With revenue declining approximately $110.5 million year-over-year, our overall gross profit was down approximately $18.4 million year-over-year.

Speaker Change: This combined with lower tape media and L. T O royalty payments was partially offset by an increase in our primary and active scale solutions.

Ken Gianella: With revenue declining approximately 110.5 million year-over-year, our overall gross profit was down approximately 18.4 million year-over-year. We responded to the lower the loss of higher volume, lower margin hyperscale and media business, with proactive actions and manufacturing and services, along with pricing actions and improving product mix in our core business. This increased our gap gross margin 614 basis points to 40% on a gap basis over the prior year. We expect this improved gross margin performance to continue into FY25. Gap net loss for fiscal 2024 was 41.3 million, or a loss of 43 cents per share, compared to a loss of 18.4 million, or 20 cents per share, in the prior year.

Speaker Change: With revenue declining approximately $110 5 million year over year. Our overall gross profit was down approximately $18 4 million year over year.

Kenneth Gianella: We responded to the loss of higher volume, lower margin, hyperscale, and media business with proactive actions in manufacturing and services, along with pricing actions and improving product mix in our core business. This increased our GAAP gross margin by 614 basis points to 40% on a GAAP basis over the prior year. We expect this improved gross margin performance to continue into FY25. Gap's net loss for fiscal 2024 was $41.3 million, or a loss of $0.43 per share, compared to a loss of $18.4 million, or $0.20 per share, in the prior year.

Speaker Change: We respond to the lower we responded to the lower the loss of higher volume lower margin Hyperscale and media business with proactive actions and manufacturing and services, along with pricing actions and improving product mix and our core business.

Speaker Change: This increased our GAAP gross margin 614 basis points to 40% on a GAAP basis over the prior year.

Speaker Change: We expect this improved gross margin performance to continue into FY 'twenty five.

Speaker Change: GAAP net loss for fiscal 2024 was $41 3 million or a loss of 43 per share compared to a loss of $18 4 million or <unk> 20 per share in the prior year.

Ken Gianella: This number includes a positive gain from warrants in FY23 and FY24 of approximately 10.3 million and 5.1 million, respectively.

Kenneth Gianella: This number includes a positive gain from warrants in FY23 and FY24 of approximately $10.3 million and $5.1 million respectively. Turning to slide 8 for non-gap metrics, a reminder that a full comparison of our gap to non-gap metrics is available at the end of this presentation in our earnings release and our forthcoming Form 10-K. After the execution of warrants and other customary adjustments, non-GAAP adjusted net loss for fiscal 24 was $27.5 million, or $0.29 loss per share, compared to a gain of $3.2 million, or $0.04 gain per share in the prior year.

Speaker Change: This number includes includes a positive gain from warrants in FY2023 in FY 'twenty four of approximately $10 3 million and $5 1 million respectively.

Ken Gianella: Turning the slide 8 for non-gap metrics, a reminder that a full comparison of our gap to non-gap metrics is available at the end of this presentation and our earnings release and our forthcoming form 10K. After the execution of warrants and other customary adjustments, non-GAAP adjusted net loss for fiscal 24 was 27.5 million or 29 cents lost per share compared to a gain of 3.2 million or 4 cent gain per share in the prior year. Adjusted EBITDA in fiscal year 2024 was a negative 5.3 million and below or prior year by approximately 26.4 million. The decline in EBITDA primarily reflected lower than anticipated revenue and gross profit within the year and includes a negative effects impact of approximately 1.3 million dollars.

Speaker Change: Turning to slide eight for non-GAAP metrics, a reminder, that a full comparison of our GAAP to non-GAAP metrics is available at the end of this presentation and our earnings release and our forthcoming Form 10-K.

Speaker Change: After the X execution of warrants and other customary adjustments non-GAAP adjusted net loss for fiscal 'twenty, four was $27 5 million or 29 cents loss per share compared to a gain of $3 2 million or <unk> gain per share in the prior year.

Kenneth Gianella: Adjusted EBITDA in fiscal year 2024 was a negative $5.3 million and below our prior year by approximately $26.4 million. The decline in EBITDA primarily reflected lower than anticipated revenue and gross profit within the year and included a negative FX impact of approximately $1.3 million.

Speaker Change: Adjusted EBITDA in fiscal year, 2024 was a negative $5 3 million and below our prior year by approximately $26 4 million.

Speaker Change: The decline in EBITDA, primarily reflected lower than anticipated revenue and gross profit within the year and includes a negative FX impact of approximately $1 $3 million.

Ken Gianella: We were able to offset some of the loss with actions in recent quarters that resulted in over 10 million of permanent non-GAAP operating expense reduction in over 6 million of permanent cost of revenue improvements. We anticipate these and additional cost actions to help improve our overall operating performance in FY25.

Kenneth Gianella: We were able to offset some of the loss with actions in recent quarters that resulted in over $10 million of permanent non-GAAP operating expense reduction and over $6 million of permanent cost of revenue improvement. We anticipate these and additional cost actions to help improve our overall operating performance in FY25. Now please turn to slide 9 for an overview of debt and liquidity. Cash, cash equivalents, and restricted cash as of fiscal year ending March 31, 2024 were approximately $25.9 million. The outstanding debt, excluding debt issuance costs, split between term and our revolver was $87.9 million and $26.6 million, respectively.

Speaker Change: We were able to offset some of the loss with actions in recent quarters that resulted in an over $10 million of permanent non-GAAP operating expense reduction and over $6 million of permanent cost of revenue improvements.

Speaker Change: We anticipate these and additional cost actions to help improve our overall operating performance in FY 'twenty five.

Ken Gianella: Now please turn to slide 9 for an overview of debt and liquidity. Cash, cash equivalence, and restricted cash as a fiscal year ending March 31, 2024 were approximately 25.9 million. Outstanding debt, excluding debt issuance costs split between term and our revolver, was 87.9 million in 26.6 million respectively. At fiscal year end, the company's net debt position was 88.6 million.

Speaker Change: Now please turn to slide nine for an overview of debt and liquidity.

Speaker Change: Cash cash equivalents and restricted cash as of fiscal year, ending March 31, 2024 were approximately $25 9 million.

Speaker Change: Outstanding debt, excluding debt issuance cost split between term and our revolver was $87 9 million and $26 6 million respectively.

Kenneth Gianella: At fiscal year-end, the company's net debt position was $88.6 million. Now, a few comments on capital structure and debt reduction. Subsequent to our fiscal year-end on April 12th, we announced that Quantum completed a transaction with a partner to provide turnkey third-party logistics and asset management for its global service operation. As part of this arrangement, Quantum sold certain service inventory assets for an approximate payment of $15 million.

Speaker Change: At fiscal year end, the company's net debt position was $88 6 million.

Ken Gianella: Now a few comments on capital structure and debt reduction. Subsequent to our fiscal year end on April 12, we announced that Quantum completed a transaction with a partner to provide turnkey third party logistics in asset management for its global service operation. As part of this arrangement, Quantum sold certain service inventory assets for an approximate payment of $15 million. Quantum used proceeds from the disposition of these assets to improve its financial flexibility, including paying down approximately $12.3 million of its existing term debt. This transaction is consistent with the company's broader effort to prioritize certain strategic and financial initiatives to improve Quantum's capital structure and operating model.

Now a few comments on capital structure and debt reduction.

Speaker Change: Subsequent to our fiscal year end on April 12, we announced the quantum completed a transaction with a partner to provide turnkey third party logistics and it's an asset management for its global service operation.

Speaker Change: As part of this arrangement quantum sold certain service inventory assets for an approximate payment of $15 million quantum used proceeds from the disposition of these assets to improve its financial flexibility, including paying down approximately $12 3 million of its existing term debt.

Kenneth Gianella: Quantum used proceeds from the disposition of these assets to improve its financial flexibility, including paying down approximately $12.3 million of its existing term debt. This transaction is consistent with the company's broader effort to prioritize certain strategic and financial initiatives to improve Quantum's capital structure and operating model. This includes projects targeting improvements to working capital, accelerated growth of new products, Divestment of Non-Core Products and Assets, and Restructuring Our Operations to a More Focused Business.

Speaker Change: Sure.

Speaker Change: This transaction is consistent with the company's broader effort to prioritize certain strategic and financial initiatives to improve quantum's capital structure and operating model.

Ken Gianella: this includes projects targeting improvements to working capital, accelerated growth of new products, divestment of non-core products and assets, and restructuring our operations to a more focused business. Over the next 12 months, we are committed to finding ways to further reduce our debt profile and drive improved profitability.

This includes projects targeting improvements to working capital accelerated growth of new products.

Speaker Change: Divestment of non core products and assets and restructuring our operations to a more focused business.

Kenneth Gianella: Over the next 12 months, we are committed to finding ways to further reduce our debt profile and drive improved profitability. Turning to slide 10, an important part of our operating model is our continued focus on our annual recurring and subscription revenue streams. Total Annual Recurring Revenue, or ARR, for FY24 was approximately 46% of our total revenue at $144.9 million, with a gross margin on this revenue being approximately 65%. As a company, we aim to continuously grow our total ARR by maximizing opportunities with both our partners and customers globally in our service and subscription offering. In FY24, the subscription portion of our total ARR increased approximately 33% year-over-year to approximately $17.8 million.

Speaker Change: Over the next 12 months, we are committed to finding ways to further reduce our debt profile and drive improved profitability.

Ken Gianella: Next, turning to slide 10, an important part of our operating model is continued focus on our annual recurring and subscription revenue streams. Total annual recurring revenue, or ARR, for FY24 was approximately 46% of our total revenue at $144.9 million, with a gross margin on this revenue being approximately 65%. As a company, we aim to continuously grow our total ARR by maximizing opportunities with both our partners and customers globally and our service and subscription offerings. In FY24, the subscription portion of our total ARR increased approximately 33% year over year to approximately $17.8 million. We continue to see strong implementation of our subscription offering, with over 92% of new customers on subscription.

Speaker Change: Next turning to slide 10, and important part of our operating model is continued focus on our annual recurring and subscription revenue streams.

Speaker Change: Total annual recurring revenue or <unk> for FY 'twenty four was approximately 46% of our total revenue at $144 $9 million with a gross margin on this revenue being approximately 65%.

As a company we aimed.

Speaker Change: Tenuously grow our total <unk> by maximizing opportunities with both our partners and customers globally, and our service and subscription offerings.

Speaker Change: In FY 'twenty for the subscription portion of our total <unk> increased approximately 33% year over year to approximately $17 8 million.

Kenneth Gianella: We continue to see strong implementation of our subscription offering with over 92% of new customers on subscription. Also, as we complete our first subscription renewal cycle, we are very encouraged by the progress we are seeing with a near 100% renewal rate in FY24. To accelerate our total ARR efforts, we recently launched Quantum Go as a way for companies to purchase our end-to-end solutions as a scalable turnkey model on a cost-effective subscription basis.

Speaker Change: We continue to see strong implementation of our subscription offering with over 92% of new customers on subscription.

Ken Gianella: Also, as we complete our first subscription renewal cycle, we are very encouraged by the progress we are seeing with a near 100% renewal rate in FY24. To accelerate our total ARR efforts, we recently launched Quantum Go as a way for companies to purchase our end-to-end solutions as a scalable turnkey model on a cost-effective subscription basis.

Speaker Change: Also as we complete our first subscription renewal cycle. We are very encouraged by the progress we're seeing with a near 100% renewal rate in FY 'twenty four.

Speaker Change: To accelerate our total our efforts we recently launched quantum go as a way for companies to purchase our end to end solutions as a scalable turnkey model on a cost effective subscription basis, we will be providing more detail on our quantum go program and future updates.

Ken Gianella: We will be providing more detail on our Quantum Go program in future updates.

Kenneth Gianella: We will be providing more detail on our Quantum Go program in future updates. Turning to slide 11, I'll now review the company's guidance for the first quarter of Fiscal 25 and our targeted outlook for the full year. First, we anticipate total revenue in the first quarter to be approximately $72 million, plus or minus $2 million. On a year-over-year basis, this range reflects the large reduction in revenue contribution from our largest hyperscale and customer and a significantly lower level of other tape-based solutions. This non-GAAP estimation excludes or does not update the treatment of warrants.

Ken Gianella: Turning to slide 11, I will now review the company's guidance for the first quarter of fiscal 25 and our targeted outlook for the full year. First, we anticipate total revenue in the first quarter to be approximately 72 million plus or minus 2 million dollars. On a year-over-year basis, this range reflects the large reduction in revenue contribution from our largest hyperscale and customer, and a significantly lower level of other tape-based solutions. We expect non-GAAP adjusted net loss per share for the first quarter to be negative 9 cents plus or minus 2 cents per share based on an estimated 96 million shares outstanding.

Kenneth Gianella: Adjusted EBITDA for the first quarter is expected to be approximately a negative two million dollars. Additionally, we anticipate first quarter gross margins of approximately 40% and non-GAAP operating expenses of approximately $33 million. In terms of our targeted outlook for full year 2025, we anticipate revenue to be essentially flat year over year at approximately $310 million, plus or minus $10 million, which reflects the reduced baseline business for both our media and hyperscale solutions.

Speaker Change: Turning to slide 11 now.

Speaker Change: Now I'll review the company's guidance for the first quarter of fiscal 'twenty, five and our targeted outlook for the full year.

Speaker Change: First we anticipate total revenue in the first quarter to be approximately $72 million plus or minus $2 million.

Speaker Change: On a year over year basis. This range reflects the large reduction in revenue contribution from our largest hyperscale and customer and a significantly lower level of other tape based solutions.

Speaker Change: We expect non-GAAP adjusted net loss per share for the first quarter to be negative <unk>, <unk>, plus or minus <unk> <unk> per share based on an estimated 96 million shares outstanding.

Ken Gianella: This non-GAAP estimation excludes our updated treatment of warrants. Adjusted EBITDA for the first quarter is expected to be approximately a negative $2 million. Additionally, we anticipate first quarter gross margins of approximately 40 percent and non-GAAP operating expense of approximately 33 million. In terms of our targeted outlook for full year 2025, we anticipate revenue to be essentially flat year-over-year at approximately 310 million plus or minus 10 million, which reflects the reduced baseline business for both our media and hyperscale solutions. Partially offsetting the lower revenue from legacy solutions, we anticipate increased demand for our higher margin Active Scale, Store Next and Myriad products.

This non-GAAP estimation excludes our updated treatment of warrants.

Speaker Change: Adjusted EBITDA for the first quarter is expected to be approximately a negative $2 million. Additionally.

Additionally, we anticipate first quarter gross margins of approximately 40% and non-GAAP operating expense of approximately $33 million.

Speaker Change: In terms of our targeted outlook for full year 2025, we anticipate revenue to be essentially flat year over year at approximately $310 million plus or minus $10 million, which reflects the reduced baseline business for both our media and Hyperscale solutions.

Kenneth Gianella: Partially offsetting the lower revenue from legacy solutions, we anticipate increased demand for our higher-margin ActiveScale, StoreNext, and Myriad products. As a result of our ongoing cost improvements, we anticipate total non-GAAP operating expense to be approximately $124 million. Combined with a more favorable product mix, adjusted EBITDA for the full year is expected to be approximately $15 million, plus or minus $5 million. We anticipate free cash flow for the full year to be positive, reflecting improved operating performance and significantly less project spend in the back half of the fiscal year.

Speaker Change: Partially offsetting the lower revenue from legacy solutions, we anticipate increased demand for our higher margin active scale store next and myriad products.

Ken Gianella: Maxx. As a result of our ongoing cost improvements, we anticipate total non-GAAP operating expense to be approximately $124 million. Combined with the more favorable product mix, adjusted a bit of for the full year is expected to be approximately $15 million plus or minus $5 million. We anticipate free cash flow for the full year to be positive, reflecting improved operating performance and significantly less project spend in the back half of the fiscal year.

Speaker Change: As a result of our ongoing cost improvements, we anticipate total non-GAAP operating expense to be approximately $124 million can.

Speaker Change: Combined with a more favorable product mix adjusted EBITDA for the full year is expected to be approximately $15 million plus or minus $5 million.

Speaker Change: We anticipate free cash flow for the full year to be positive, reflecting improved operating performance and significantly less project spend in the back half of the fiscal year.

Ken Gianella: To close out, please turn to slide 12 and let me share some detailed insights on our business transformation initiatives. We are expecting to contribute to adjusted EBITDA improvement for the full year. Our focus on recovering adjusted EBITDA and FY25 and improving total profitability will continue to center on shifting resources to our global footprint, cost reduction initiatives, and our sales team's efforts in driving more end-to-end higher margin subscription-based solutions. We anticipate our efforts will deliver year-over-year improvements in profitability and operating structure in fiscal year 2025. To accelerate these efforts, we are engaged in external firm FTI to assist us in this journey.

Kenneth Gianella: To close out, please turn to slide 12 and let me share some detailed insights on our business transformation initiatives we are expecting to contribute to the full adjusted EBITDA improvement. Our focus on recovering adjusted EBIT in FY25 and improving total profitability will continue to center on shifting resources to our global footprint, cost reduction initiatives, and our sales team's efforts in driving more end-to-end higher margin subscription-based solutions. We anticipate our efforts will deliver year-over-year improvements in profitability and operating structure in fiscal year 2025.

Speaker Change: To close out please turn to slide 12, and let me share some detailed insights on our business transformation initiatives, we are expecting to contribute adjusted EBITDA improvement for the full year.

Our focus on recovering adjusted had been in FY 'twenty, five and improving total profitability will continue to center on shifting resources to our global footprint cost reduction initiatives and our sales team's efforts in driving more end to end higher margin subscription based solutions, we anticipate our efforts will deliver year over year.

Speaker Change: Improvements in profitability and operating structure in fiscal year 2025 to accelerate these efforts we are engaged in an.

Kenneth Gianella: To accelerate these efforts, we are engaged with an external firm, FTI, to assist us in this journey. We are well underway with taking actions that will yield improvements throughout FY25. Now, let me walk you through FY24 and our path back to FY25. With the loss of Quantum's top customer and leading hyperscaler, combined with losses in other legacy products such as Tait Media, Royalties, DXI, and Video Surveillance, the company saw a year-over-year decline in gross profit of over $31 million.

Speaker Change: External firm FTR to assist us in this journey, we are well underway on taking actions that will yield improvements throughout FY 'twenty five.

Ken Gianella: We are well underway on taking actions that will yield improvements throughout FY25.

Ken Gianella: Now let me walk you through FY24 and our path back to FY25. With the loss of Quantum's top customer and leading hyper-scaler, combined with losses in other legacy products such as tape media, royalties, DXI, and video surveillance, the company saw a year-over-year decline in gross profit of over $31 million. While we accelerated the already targeted year-in savings to help offset the decline, we did not make a sizable impact. The FY24 in-year impact of SSP to adjusted EBITDA was a negative $2.9 million for full-year, resulting in a total adjusted EBITDA of negative $5.3 million.

Kenneth Gianella: While we accelerated the already targeted year-end savings to help offset the decline, we did not make a sizable impact. The FY24 end-year impact of SSP on adjusted EBITDA was a negative $2.9 million for a full year, resulting in a total adjusted EBITDA of negative $5.3 million. As a result, these results are disappointing and unacceptable.

Speaker Change: Now, let me walk you through FY, 'twenty, four and our path back to FY 'twenty five.

Speaker Change: With the loss of Quantum's top customer and leading hyperscale or combined with losses and other legacy products such as tape media royalties DSI and video surveillance. The company saw a year over year decline in gross profit of over $31 million.

Speaker Change: While we accelerated the already targeted year year in savings to help offset the decline we did not make a sizable impact.

Speaker Change: The FY 'twenty four in year impact of SSP to adjusted EBITDA was a negative $2 9 million for full year, resulting in a total adjusted EBITDA of negative $5 3 million.

Ken Gianella: As a result, these results are disappointing and unacceptable. Due to the velocity of the declines in our hyper-scale and other legacy products, our previous cost adjustments were not enough to significantly offset the declines. However, looking ahead, we have additional actions underway to stabilize our legacy business and improve product mix while continuing to implement operational improvements. These projects should add at least $5 million in incremental gross profit combined with $8.7 million from previous cost savings actions taken in FY24, in an additional $6.7 million of savings in fiscal year 2025. Collectively, our adjusted EBITDA outlook of approximately $15 million.

Speaker Change: As a result, these results are disappointing and unacceptable.

Kenneth Gianella: Due to the velocity of the declines in our Hyperscale and other legacy products, our previous cost adjustments were not enough to significantly offset the decline. However, looking ahead, we have additional actions underway to stabilize our legacy business and improve product mix while continuing to implement operational improvements. These projects should add at least $5 million in incremental gross profit, combined with $8.7 million from previous cost savings actions taken in FY24 and an additional $6.7 million of savings in FY2025, collectively resulting in an adjusted EBITDA outlook of approximately $15 million.

Speaker Change: Due to the velocity of the declines in our Hyperscale and other legacy products, our previous cost adjustments were not enough to significantly offset the declines.

Speaker Change: However, looking ahead, we have additional actions underway to stabilize our legacy business and improved product mix, while continuing to implement operational improvements.

These projects should add at least $5 million in incremental gross profit combined with $8 7 million from previous cost savings actions taken in FY 'twenty, four and an additional $6 7 million of savings.

Speaker Change: In fiscal year 2025.

Collectively, resulting in our adjusted EBITDA outlook of approximately $15 million.

Ken Gianella: Finally, what is not reflected in this chart is the company has spent significant time in capital on several self-help projects, including our restructuring and optimization, restatement due to SSP and warrants, new ERP and support systems, and significant efforts to improve our capital structure.

Kenneth Gianella: Finally, what is not reflected in this chart is that the company has spent significant time and capital on several self-help projects, including our restructuring and optimization, restatement due to SSP and warrants, new ERP and support systems, and significant efforts to improve our capital structure. We anticipate the special one-time project spending to be completed at the end of fiscal second quarter 2025, contributing significantly to improving operating free cash flow in the second half of 2025. Fiscal year 2025.

Speaker Change: Finally, what is not reflected in this chart is the company has spent significant time and capital on several self help projects, including our restructuring and optimization.

Speaker Change: Statement due to SSP and warrants, new ERP and support systems and significant efforts to improve our capital structure.

Ken Gianella: Fisher. We anticipate the special one-time project spending to be completed at the end of fiscal 2nd quarter 2025, contributing significantly to improving operating free cash flow in the second half of 2025.

Speaker Change: We anticipate the special one time project spending to be completed at the end of fiscal second quarter 2025, contributing significantly to improving operating free cash flow in the second half of 2025.

Ken Gianella: Fiscal Year 2025. As we emerge from these extraordinary headwinds, Quantum is demonstrating an ability to operate a disciplined manufacturing and service organization while implementing strong cost and discretionary spend controls. We will continue to find ways to reduce our debt and improve our capital structure for the long term. Our path to a successful operating model will be driven on proof points of focus growth in our subscription-based revenue, optimizing our performance through improved operational efficiency, leveraging our global footprint, and executing self-help cost reduction initiatives. All of these programs are actively underway and are making strong progress as we enter FY25.

Speaker Change: Fiscal year 2025.

Kenneth Gianella: As we emerge from these extraordinary headwinds, Quantum is demonstrating an ability to operate a disciplined manufacturing and service organization while implementing strong cost and discretionary spend control. We will continue to find ways to reduce our debt and improve our capital structure for the long term. Our path to a successful operating model will be driven by proof points of focused growth in our subscription-based revenue, optimizing our performance through improved operational efficiency, leveraging our global footprint, and executing self-help cost reduction initiatives. All of these programs are actively underway and are making strong progress as we enter FY25. Thank you for your time, and with that, I'd now like to hand the call back to Jamie. Thank you, Ken.

Speaker Change: As we emerge from these extraordinary headwinds quantum is demonstrating an ability to operate a disciplined manufacturing and service organization, while implementing strong cost and discretionary spend controls.

Speaker Change: We will continue to find ways to reduce our debt and improve our capital structure for the long term our path to a successful operating model will be driven on proof points of focused growth in our subscription based revenue optimizing our performance through improved operational efficiency leveraging our global footprint.

Speaker Change: Executing self help cost reduction initiatives.

All of these programs are actively underway and are making strong progress as we enter FY 'twenty five.

Jamie Lerner: Thank you for your time, and with that, I'd now like to hand the call back to Jamie. Thank you, Ken.

Speaker Change: <unk>.

Speaker Change: Thank you for your time and with that I'd now like to hand, the call back to Jamie.

James Lerner: Compared to this time last year, our fiscal year results and guidance are far from where we thought they would be today. We'd always expected Hyperscale revenue to scale down over time, but the sudden discontinuation of orders from our largest Hyperscale customer at the end of fiscal Q1 2024 was a sizable and unanticipated setback. The magnitude and pace of this revenue decline more than offset the steps we had already been taking to meaningfully improve EBITDA by reducing costs, resulting in a significant impact on our overall financial performance.

James Lerner: Thank you Ken compared to this time last year, our fiscal year results and guidance are far from where we thought they would be today.

Jamie Lerner: Compared to this time last year, our fiscal year results and guidance are far from where we thought they would be today. We'd always expected hyperscale revenue to scale down over time. However, the sudden discontinuation of orders from our largest hyperscale customer at the end of fiscal Q1 2024 was the sizeable and unanticipated setback. The magnitude and pace of this revenue decline, more than offset the steps we had already been taking to meaningfully improve EBITDA by reducing costs, resulting in a significant impact to our overall financial performance.

James Lerner: We had always expected hyperscale revenue to scale down over time, however, the sudden discontinuation of orders from our largest hyperscale customer at the end of fiscal Q1, 2024 was the sizable and unanticipated setbacks.

James Lerner: The magnitude and pace of this revenue decline more than offset the steps we had already been taking to meaningfully improve EBITDA by reducing costs, resulting in a significant impact to our overall financial performance.

Jamie Lerner: While we are clearly disappointed with our results, we've responded by taking this opportunity to accelerate our business transformation. This includes an ongoing focus on improving the company's capital structure, as well as a series of operational and strategic initiatives, many of which have been underway for many months. Turning to slide 14 in our capital structure, as Ken highlighted, in April, we completed a transaction to reduce liabilities and carrying costs through the sale of service inventory assets. In addition to lowering the inventory that Quantum previously had to maintain to service certain customers, we used proceeds from this transaction to pay down $12 million of outstanding debt.

James Lerner: While we are clearly disappointed with our results, we've responded by taking this opportunity to accelerate our business transformation. This includes an ongoing focus on improving the company's capital structure, as well as a series of operational and strategic initiatives, many of which have been underway for many months. Turning to slide 14 in our capital structure, as Ken highlighted, in April, we completed a transaction to reduce liabilities and carrying costs through the sale of service inventory assets. In addition to lowering the inventory that Quantum previously had to maintain to service certain customers, we used proceeds from this transaction to pay down $12 million of outstanding debt.

Speaker Change: While we are clearly disappointed with our results. We have responded by taking this opportunity to accelerate our business transformation. This includes an ongoing focus on improving the company's capital structure as well as a series of operational and strategic initiatives, many of which have been underway for many months.

Speaker Change: Turning to slide 14, and our capital structure as Ken highlighted in April we completed a transaction to reduce liabilities and carrying costs through the sale of service inventory assets.

Speaker Change: In addition to lowering the inventory that quantum previously had to maintain to service certain customers.

Kenneth Gianella: Use proceeds from this transaction to pay down $12 million of outstanding debt today.

Jamie Lerner: Today, we are currently pursuing further strategic measures to monetize non-core assets in order to both strengthen the company's balance sheet, as well as focus our future business around the most strategic and profitable product areas.

James Lerner: Today, we are currently pursuing further strategic measures to monetize non-core assets in order to both strengthen the company's balance sheet as well as focus our future business around the most strategic and profitable product areas. Turning to slide 15, we've also taken extensive actions to further streamline our business and sales organization in order to drive and accelerate improved operational performance. We have changed our sales leadership and reorganized our sales team structure.

Kenneth Gianella: Today, we are currently pursuing further strategic measures to monetize non core assets in order to both strengthen the companys balance sheet as well as focus our future business around the most strategic and profitable product areas.

Jamie Lerner: Turning to slide 15, we've also taken extensive actions to further streamline our business and sales organization in order to drive and accelerate improved operational performance. We have changed our sales leadership and reorganized our sales team structure. This includes refining our account segmentation with customer-focused playbooks for cross-selling, upsell. as well as redefining our go-to-market motions across our sales organization. These actions aim to increase our outside team's ability to more efficiently focus on net new accounts, new product insertion, and growth-focused quotas. As an extension of our Salesforce, our Partner Community provides us with market scale. In recent months, we've announced an expansion of our global partnerships in Asia Pacific with broader distributor agreements in Korea, Japan, Australia, and New Zealand.

Kenneth Gianella: Turning to slide 15, we.

Kenneth Gianella: We've also taken extensive actions to further streamline our business and sales organization in order to drive and accelerate improved operational performance we.

Speaker Change #100: We have changed our sales leadership and reorganized our sales team structure. This.

James Lerner: This includes refining our account segmentation with customer-focused playbooks for cross-sell and upsell, as well as redefining our go-to-market strategies across our sales organizations. These actions aim to increase our outside team's ability to more efficiently focus on net new accounts, new product insertion, and growth-focused quotas. As an extension of our sales force, our partner community provides us with market scale. In recent months, we've announced an expansion of our global partnerships in Asia Pacific with broader distributor agreements in Korea, Japan, Australia, and New Zealand.

Speaker Change: This includes <unk>.

Speaker Change #101: We're refining our account segmentation with customer focus playbooks for cross sell and upsell as.

Speaker Change #102: As well as redefining our go to market motions across our sales organization.

These actions aimed to increase our outside teams ability to more efficiently focus on net new accounts, new product insertion and growth focused quotas.

Speaker Change #103: As an extension of our sales force our partner community provides us with market scale in recent months, we've announced an expansion of our global partnerships.

Speaker Change #104: In Asia Pacific with broader distributor agreements in Korea, Japan, Australia, and New Zealand.

Jamie Lerner: We also developed a partnership with Valacy, which has deep reach into retail analytics, AI use cases, and video surveillance. Additionally, we launched a new quantum alliances channel program with an improved partner portal that offers enhanced online deal registration, training and certification, robust lead programs, expanded partner incentives, and advanced reporting and analytics.

James Lerner: We also developed a partnership with Velocity, which has deep reach into retail analytics, AI use cases, and video surveillance. Additionally, we launched a new Quantum Alliances channel program with an improved partner portal that offers enhanced online deal registration, training, and certification, robust lead programs, Expanded Partner Incentives, and Advanced Reporting and Analytics. During this coming fiscal year, we will continue recruiting new resellers that have specific reach into AI, life sciences, and other technical workloads where myriad and active scale solve the most demanding data requirements. In addition to the sales team, we have revamped our larger organizational structure to achieve greater efficiency across the company, including simplifying our managerial layers with appropriate span of control.

Speaker Change #105: <unk> also developed a partnership with <unk>, which has deep reach into retail analytics AI use cases and video surveillance. Additionally.

Speaker Change #106: Additionally, we launched a new quantum alliances channel program with an improved partner portal that offers enhanced online deal registration training and certification robust lead programs expanded partner incentives and advanced reporting and analytics.

Jamie Lerner: During this coming fiscal year, we will continue recruiting new resellers that have specific reach into AI, life sciences, and other technical workloads where myriad and active scale solve the most demanding data requirements. In addition to the sales team, we have revamped our larger organizational structure to achieve greater efficiency across the company, including simplifying our managerial layers with appropriate span of control. We've also changed our product leadership from a product council and recalibrated our product roadmap. This has streamlined our product resource allocation, rationalized our line card, and enabled vendor consolidation. Moreover, we've modernized our internal systems in direct support of optimizing our go-to-market model, reorganizing for efficiency, and rationalizing our product lines.

Speaker Change #107: During this coming fiscal year, we will continue recruiting new resellers that have specific reach into AI life Sciences, and other technical workloads, where myriad and active scale solve the most demanding data requirements.

In addition to the sales team, we have revamped our larger organizational structure to achieve greater efficiency across the company, including simplifying our managerial layers with appropriate span of control we.

James Lerner: We've also changed our product leadership, formed a product council, and recalibrated our product roadmap. This has streamlined our product resource allocation, rationalized our line card, and enabled vendor consolidation. Moreover, we've modernized our internal systems in direct support of optimizing our go-to-market model, reorganizing for efficiency, and rationalizing our product line. We have completed our ERP rollout to simplify tracking our processes and how we run the business. Most importantly, how we configure, price, and quote our product solutions to customers.

Speaker Change #108: We've also changed our product leadership Forum.

Speaker Change #109: Our product counsel and Recalibrated our product roadmap.

Speaker Change #110: This has streamlined our product resource allocation rationalized, our line card and enabled vendor consolidation.

Speaker Change #111: Moreover, we've modernized our internal systems indirect support of optimizing our go to market model reorganizing for efficiency and rationalizing our product lines. We have completed our ERP rollout to simplified tracking our processes and how we run the business. Most importantly, how we can.

Jamie Lerner: We have completed our ERP rollout to simplify tracking our processes and how we run the business. Most importantly, how we configure, price, and quote our product solutions to customers.

Speaker Change #112: Figure price and quote our product solutions to customers.

Jamie Lerner: And finally, turning to slide 16. In addition to operational improvements, we have diligently working to accelerate growth of profitable revenue streams. This work has focused our efforts on a core set of use cases we excel at. With video and video-like data, coupled with a streamlined product roadmap and effective go-to-market. In May of this year, we announced Quantum Go, a pay-as-you-go subscription model to meet customers' increasing data management needs and budgetary objectives, particularly as AI and machine learning continues to drive massive data growth. This is in line with Quantum's overall shift to software-defined platforms, as we saw subscription-based ARR increase 33% year over year.

James Lerner: And finally, turning to slide 16, in addition to operational improvements, we have been diligently working to accelerate growth of profitable revenues. This work has focused our efforts on a core set of use cases we excel at, with video and video-like data, coupled with a streamlined product roadmap and effective go-to-market. In May of this year, we announced Quantum Go, a pay-as-you-go subscription model to meet customers' increasing data management needs and budgetary objectives, particularly as AI and machine learning continue to drive massive data growth.

Speaker Change #113: And finally, turning to slide 16. In addition to operational improvements we have been diligently working to accelerate growth of profitable revenue streams.

Speaker Change #114: This work has focused our efforts on our core set of use cases, we excel at with video and video like data, coupled with streamlined product roadmap and effective go to market.

Speaker Change #115: In May of this year, we announced quantum go a pay as you go subscription models to meet customers, increasing data management needs and budgetary objectives, particularly as AI and machine learning continues to drive massive data growth.

James Lerner: This is in line with Quantum's overall shift to software-defined platforms, as we saw subscription-based ARR increase 33% year over year. Quantum has deep experience in storing and managing unstructured data, and particularly video. With AI driving the most unstructured data growth today and into the foreseeable future, Quantum is uniquely positioned to support this growing dataset as an extension of our expertise.

Quantum: This is in line with Quantum's overall shift to software defined platforms as we saw subscription based <unk> increased 33% year over year.

Jamie Lerner: Quantum has deep experience in storing and managing unstructured data, and particularly Biddy. with AI driving the most unstructured data growth today and into the foreseeable future, Quantum is uniquely positioned to support the scrolling data set as an extension of our expertise. To accelerate our presence in AI use cases across our key verticals, Myriad became generally available as we entered this calendar year. And while these deal cycles can be long, we are now seeing indications of momentum beyond our early access customers. Our vision with Myriad was to build a modern architecture suited to the demands of today's data set and positions us on the right path to provide the performance customers need to prepare and curate data to train AI models.

Speaker Change #117: Quantum has deep experience in storing and managing unstructured data and particularly video.

Speaker Change #118: With AI driving the most unstructured data growth today and into the foreseeable future quantum is uniquely positioned to support this growing dataset as an extension of our expertise.

James Lerner: To accelerate our presence in AI use cases across our key verticals, Myriad became generally available as we entered this calendar year. And while these deal cycles can be long, we are now seeing indications of momentum beyond our early access customers. Our vision with Myriad was to build a modern architecture suited to the demands of today's data sets and positions us on the right path to provide the performance customers need to prepare and curate data to train AI models.

Speaker Change #119: To accelerate our presence in AI use cases across our key verticals myriad became generally available as we entered this calendar year.

Speaker Change #119: And while these deal cycles can be long, we are now seeing indications of momentum beyond our early access customers. Our vision with myriad was to build a modern architecture suited to the demands of today's dataset.

Speaker Change #119: And positions us on the right path to provide the performance customers need to prepare and curate data to train AI models.

Jamie Lerner: We currently have several proof of concept engagements underway, concentrated in segments where we have extensive experience, including those targeting media and entertainment, along with life sciences and healthcare, as well as in industrial research and manufacturing. Within AI use cases, the familiar workflow that we've served for more than 20 years in media and entertainment has some of our largest customers following a very similar process to managing AI workloads. For example, we have two recent customers where we realized this advantage with Icon Therapeutics and the LA Dodgers. With the LA Dodgers, we were able to expand our existing footprint to include CAT DV alongside NVIDIA GPUs and quantum professional services to begin implementing an AI workflow, spanning sponsor logo recognition, facial recognition, object detection, and media enhancement.

James Lerner: We currently have several proof-of-concept engagements underway, concentrated in segments where we have extensive experience, including those targeting media and entertainment, along with life sciences and healthcare, as well as in industrial research and manufacturing. Within AI use cases, the familiar workflow that we've served for more than 20 years in media and entertainment with some of our largest customers is following a very similar process to managing AI workloads. For example, we have two recent customers where we realized this advantage, Icon Therapeutics and the LA Dodgers.

Speaker Change #120: We currently have several proof of concept engagements underway concentrated in segments, where we have extensive experience, including those targeting media and entertainment along with life Sciences, and healthcare as well as in industrial research and manufacturing.

Speaker Change #120: Within AI use cases, the familiar workflow that we've served for more than 20 years in media and entertainment have some of our largest customers is following a very similar process to managing AI workloads.

Speaker Change #121: For example, we have two recent customers, where we realized disadvantage with icon therapeutics and the La Dodgers with.

James Lerner: With the L.A. Dodgers, we were able to expand our existing footprint to include CATDV, alongside NVIDIA GPUs and Quantum Professional Services, to begin implementing an AI workflow spanning Sponsor Logo Recognition, Facial Recognition, Object Detection, and Media Enhancement.

Speaker Change #122: With the La Dodgers, we were able to expand our existing footprint to include Cat Dv, alongside Nvidia Gpus and quantum professional services to begin implementing an AI workflow spanning sponsored logo recognition facial recognition object detection.

Speaker Change #123: And media enhancement.

Jamie Lerner: Icon is a net new quantum customer that purchased Myriad and ActiveScale to meet the demanding performance requirements for their informatics and microscopy pipeline. Through AI and machine learning, they're able to rapidly analyze data and track individual proteins and live cells to support drug discovery. The high performance low latency that Myriad provided was compelling for these demands and outperformed their existing environment with Active Scale providing a multi-tier data lake foundation to preserve their critical data for decades. As we grow deeper into use cases with life sciences and research institutes where both myriad and active scale are well-suited, we're seeing strong early indicators that we are able to solve some of the toughest customer challenges and expand further in this segment.

James Lerner: Icon is a net new quantum customer that purchased Myriad and ActiveScale to meet the demanding performance requirements for their informatics and microscopy pipelines. Through AI and machine learning, they are able to rapidly analyze data and track individual proteins in live cells to support drug discovery. The high performance, low latency that Myriad provided was compelling for these demands and outperformed their existing environment, with ActiveScale providing a multi-tiered data lake foundation to preserve their critical data for decades.

Icon: Icon is a net new quantum customers that purchased myriad and active scale to meet the demanding performance requirements for their informatics and microscopy pipeline.

Speaker Change #125: Through AI and machine learning they are able to rapidly analyze data and track individual proteins and live cells to support drug discovery.

Speaker Change #125: The high performance low latency that myriad provided was compelling for these demands and outperformed their existing environment with active scale, providing a multi tiered data Lake foundation to preserve their critical data for decades.

James Lerner: As we grow deeper into use cases with life sciences and research institutes, where both myriad and active scale are well suited, we are seeing strong early indicators that we are able to solve some of the toughest customer challenges and expand further in this sector. We've seen persistent growth in this vertical, with revenue growing 20% over the last three years. In addition to Icon Therapeutics as the first Myriad customer, other customer wins in this vertical over the past year include seven-figure active scale expansion deals with both Genomics England and the European Bioinformatics Institute. A new active-scale cold storage solution at Fraunhofer Research Institute and University of Texas Applied Research Lab acquired our software-defined STORNEXT architecture.

Speaker Change #126: As we grow deeper into use cases with life Sciences and research research institutes, where both Marriott inactive scale are well suited we are seeing strong early indicators that we are able to solve some of the toughest customer challenges and expand further in this segment.

Jamie Lerner: We've seen persistent growth in this vertical, with revenue growing 20% over the last three years. In addition to Icon Therapeutics as the first Myriad customer, other customer wins in this vertical over the past year include seven-figure active scale expansion deals with both Genomics England and the European Bioinformatics Institute, a new active scale cold storage solution at Fraunhofer Research Institute, and University of Texas Applied Research Lab acquired our software-defined store next Architecture. These are all examples of organizations with exponentially growing data sets, and their research advantage lies in having their unique data stored and protected to extract insights and value.

Speaker Change #127: We've seen persistent growth in this vertical with revenue growing 20% over the last three years.

Speaker Change #128: In addition to Eikon therapeutics as the first married customer other customer wins in this vertical over the past year include seven figure active scale expansion deals with both genomics, England and the European Bioinformatics Institute.

Speaker Change #129: A new active scale cold storage solution at Froghopper Research Institute.

Speaker Change #130: And University of Texas Applied Research Lab acquired our software defined store next architecture.

James Lerner: These are all examples of organizations with exponentially growing data sets, and their research advantage lies in having their unique data stored and protected to extract insights and value. Next, while our future growth with ActiveScale and Myriad is key, it is just as important that we maintain a strong base in our traditional media and entertainment and federal sectors. We recently closed a large set of deals with the U.S. Navy, which we believe will lead to expanded revenue opportunities. Also, we see some significant wins in sports video and broadcast, including organizations with petabytes of video, such as the NBA.

These are all examples of organizations with exponentially growing data sets and their research advantage lies in having their unique data stored and protected to extract insights and value.

Jamie Lerner: Next, while our future growth with Active Scale and Myriad is key, it is just as important we maintain a strong base in our traditional media and entertainment and federal segments. We recently closed a large set of deals with the US Navy, which we believe will lead to expanded revenue opportunities. Also, we see some significant wins in sports video and broadcast, including organizations with petabytes of video, such as the NBA. Maintaining our traditional market verticals and customers is a great opportunity to upsell them on our latest active scale and myriad solutions. High performance has always been important to our core market verticals.

Next while our future growth with active scale and myriad is key it is just as important we maintain a strong base and our traditional media and entertainment and federal segments. We.

Speaker Change #131: We recently closed a large set of deals with the U S Navy, which we believe will lead to expanded revenue opportunities.

Speaker Change #132: Also we see some significant wins in sports video and broadcast including organizations with Petabytes of video such as the NBA.

James Lerner: Maintaining our traditional market verticals and customers is a great opportunity to upsell them on our latest ActiveScale and Myriad solutions. High performance has always been important to our core market verticals. And as we expand further into life sciences and research and target AI use cases, flash solutions are expected to be increasingly important to our customer base. To close the gap in our portfolio, in April, we announced the addition of flash to both our ActiveScale and DXI product families. Flash is now available across our Data Platform Portfolio, with the only exception being our tape library.

Maintaining our traditional market verticals and customers is a great opportunity to up sell them on our latest active scale and <unk> solutions.

Speaker Change #133: High performance has always been important to our core market verticals and as we expand further into life Sciences and research and target AI use cases flash solutions are expected to be increasingly important to our customer base.

Jamie Lerner: And as we expand further into life sciences and research and target AI use cases, flash solutions are expected to be increasingly important to our customer base.

Jamie Lerner: To close the gap in our portfolio, in April, we announced the addition of flash to both our Active Scale and DXI product families. Flash is now available across our data platform portfolio, with the only exception being our tape libraries. Our scalar automation offers the highest density, greenest, and most effective cost per terabyte, which is a key advantage for quantum. We were also pleased to recently announced our new i7 Raptor, the new low cost solution for AI data lakes to support hyper scale and exit scale environments.

Speaker Change #133: To close the gap in our portfolio in April we announced the addition of flash to both our active scale and DSI product families.

Speaker Change #133: Flash is now available across our.

Speaker Change #133: Data platform portfolio with the only exception being our tape libraries.

James Lerner: Our scalar automation offers the highest density, greenest, and most effective cost per terabyte, which is a key advantage for quantum. We were also pleased to recently announce our new i7 Raptor, the new low-cost solution for AI data lakes to support hyperscale and exascale environments. Looking ahead, we remain committed to driving accelerated revenue growth by stabilizing and improving the product performance of Automation and StoreNext while driving growth in our active scale and myriad product offerings.

Speaker Change #134: Our scalar automation offers the highest density greenest and most effective cost per terabyte, which is a key advantage for quantum.

Speaker Change #135: We were also pleased to recently announced our new <unk> seven Raptor, the new low cost solution for AI data lakes to support Hyperscale and exit scale environments.

Jamie Lerner: Looking ahead, we remain committed to driving accelerated revenue growth by stabilizing and improving the product performance of Automation and StoreNext while driving growth in our active scale and myriad product offerings. Quantum remains committed to use cases for median entertainment, life sciences, industrial tech, and federal while we improve our position to address the prevailing industry trends around artificial intelligence across the multiple verticals we serve. The operational efficiencies and business optimization we've driven over the past several months and continue to drive is being tied together with the strategy culminating in higher ASPs and increased margins for future growth and profitability.

Speaker Change #136: Looking ahead, we remain committed to driving accelerated revenue growth by stabilizing and improving the product performance of automation in store next while driving growth in our active scale and myriad product offerings.

James Lerner: Quantum remains committed to use cases for media and entertainment, life sciences, industrial tech, and federal while we improve our position to address the prevailing industry trends around artificial intelligence across the multiple verticals we serve. The operational efficiencies and business optimization we've driven over the past several months and continue to drive are being tied together with a strategy culminating in higher ASVs and increased margins for future growth and profitability. The additional flash across our portfolio not only yields the higher performance required by AI workloads but also higher selling prices.

Speaker Change #137: Quantum remains committed to use cases for our media and entertainment life Sciences, Industrial Tech and federal while we improve our position to address the prevailing industry trends around artificial intelligence across multiple verticals we serve.

Speaker Change #138: The operational efficiencies and business optimization, we've driven over the past several months and continue to drive is being tied together with the strategy, culminating in higher asps.

Speaker Change #138: And increased margins for future growth and profitability.

Jamie Lerner: The addition of flash across our portfolio not only yields the higher performance required by AI workloads but also higher selling prices. Quantum's end-to-end portfolio spanning from high-performance flash to cost-effective per terabyte data lakes positions us to address a larger portion of a customer's overall stored spend, enabling them to buy the full solution from Quantum, not just a point product. Our software defined offerings are highly differentiated and command higher margins.

Speaker Change #139: The addition of flat flash across our portfolio not only yields the higher performance required by AI workloads, but also higher selling prices.

James Lerner: Quantum's end-to-end portfolio, spanning from high-performance flash to cost-effective per terabyte data lakes, positions us to address a larger portion of a customer's overall storage spend, enabling them to buy the full solution from Quantum, not just a point product.

Quantum to end to end portfolio spanning from high performance flash to cost effective per terabyte data lakes positions us to it.

Speaker Change #140: Address a larger portion of our customers' overall storage spend enabling them to buy the full solution from quantum not just a point product.

James Lerner: Our software-defined offerings are highly differentiated and command higher margins. Our path to growth has been paved by our strategy and investment to deliver a modern data platform designed for today's demanding workloads, with a go-to-market approach focused on use cases, such as video, where we have deep expertise. Taken together with our ongoing strategic initiatives to realize further cost and debt reductions, we expect to drive increased productivity and operating performance, resulting in step-change improvements in our profitability in fiscal 2025. Thank you for your time today.

Speaker Change #141: Our software defined offerings are highly differentiated and command higher margins.

Jamie Lerner: Our path to growth has been paved by our strategy and investment to deliver a modern data platform designed for today's demanding workloads. With the go-to-market approach focused on use cases with video-like data where we have deep expertise taken together with our ongoing strategic initiative.

Speaker Change #141: Our path to growth has been paved by our strategy and investment to deliver a modern data platform designed for today's demanding workloads with the go to market approach focused on use cases.

Speaker Change #142: With video like data, where we have deep expertise.

Taken together with our ongoing strategic initiatives to realize further cost and debt reductions, we expect to drive increased productivity and operating performance, resulting in step step change improvements to our profitability in fiscal 2025.

Jamie Lerner: To realize further cost and debt reductions, we expect to drive increased productivity and operating performance, resulting in step change improvements to our profitability in fiscal 2025.

Jamie Lerner: Thank you for your time today.

Speaker Change #143: Thank you for your time today, operator, we are ready to open the call to questions.

Operator: Operator, we are ready to open the call to questions. Ladies and gentlemen, at this time, we will conduct our questions. If you would like to ask a question, please press star 1 on your telephone keypad. Keith is on your line.

Operator: Operator, we are ready to open the call to questions. Thank you. And ladies and gentlemen, at this time we will conduct our question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker Change #144: Thank you and.

Operator: You may press star 2 if you would like to remove your question from the queue. For participants using speaker... It may be necessary to pick up your handset before pressing. Please while we ask our first question. [inaudible] Yeah, I just wanted to get a sense of timing on when we think we might have audited results here. Obviously, as of today, you've said that we're still dealing with unaudited, but is this a question of a couple of weeks or is it potentially more open-ended than that? Yeah, this is Ken Gianella.

Speaker Change #145: Ladies and gentlemen at this time, we will conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It.

It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Eric Martinuzzi: And our first question comes from Eric Martinuzzi with Lake Street. Please sit your question.

Speaker Change #146: And our first question comes from Eric Martin Etsy with Lake Street. Please state your question.

Ken Gianella: Yeah, I just wanted to get a sense of timing on when we think we might have auditive results here. Obviously, as of today, you've said that we're still dealing with unaudited, but is this a question of a couple of weeks, or is it potentially more open-ended than that?

Speaker Change #147: Yes, I just wanted to get a sense of timing on when we think we might have audited results here. Obviously as of today, you said that we're still dealing with on the audited but is this a question of a couple of weeks or is it.

Speaker Change #148: Potentially more open ended than that.

Kenneth Gianella: First, the numbers are complete. We just needed some time, and we don't anticipate any material adjustments to them. We just needed some time with something this size for our internal auditors to complete final reviews, and we expect in the next few days to have that out to our shareholders. We announced on our last plan, AK, that with NASDAQ, we committed to have it out by July 1st. So, you know, we're right where we want it. Okay. All right.

Ken Gianella: Yeah, this is Ken, you know. First, the numbers are complete. We just needed some time and don't anticipate any material adjustments to them. We just needed some time with something this size with our internal auditors to complete final reviews. And we expect in the next few days to have that out to our shareholders. We announced on our last plan, a K that with NASDAQ, we committed to have it out by July 1st. So, you know, we're right where we want to be to get these financials out. Okay. All right. And then obviously, you know, the big reset of the top line for this most recent fiscal year had to do with your large hyper scale or customer.

Kenneth Gianella: Yes. This is Ken.

Speaker Change #149: First the numbers are complete we just needed some time.

Kenneth Gianella: Anticipate any material adjustments to them, we just needed some time with something this size with our internal auditors to complete final reviews.

Kenneth Gianella: We expect in the next few days to have that out to our shareholders.

Speaker Change #150: We announced on our last plan.

NASDAQ: AK that with NASDAQ, we committed to have it out by July 1st So we're right, where we want to be to get these financial zone.

James Lerner: And then obviously, you know, the big reset at the top line for this most recent fiscal year had to do with your large hyperscaler customer. What can you tell us more about their decision-making process? Was this an issue where they chose a different path?

Okay Alright.

NASDAQ: Alright, and then obviously you know the big reset at the top line for this most recent fiscal year had to do with your large hyperscale or customer what can you tell us more about their decision making process was this an issue where they chose a different path they chose a competitor.

Jamie Lerner: What can you tell us more about their decision-making process? Was this an issue where they chose a different path? They chose a competitor? They, you know, they miss, misforecast their own needs. What more can you tell us? Yeah, I think they wanted to choose a business model that didn't align with our business model. You know, we're a product company, and our largest hyper scaler wanted a custom solution uniquely designed for them. That wouldn't be sellable to anyone else. It would also include contributing all the intellectual property to them to build that and build it in the business model of a contract manufacturer, which would operate in kind of three to five percent margins.

NASDAQ: Hey.

NASDAQ: Mrs.

Speaker Change #152: Miss forecast their own needs yeah, what more can you do.

James Lerner: They chose a competitor? They, you know, missed mis-forecasting their own needs. What more can you tell? Yeah, I think they wanted to choose a business model that didn't align with our business model. You know, we're a product company, and our largest hyperscaler wanted a custom solution uniquely designed for them that wouldn't be sellable to anyone else. It would also include contributing all the intellectual property to them to build that and build it in the business model of a contract manufacturer, which would operate at a kind of 3 to 5% margins. And we just looked at that and just said, look, that that's not our business model. You know, that's more like a flex tronics or someone in that business.

Speaker Change #152: Yeah, I think they.

Speaker Change #153: They wanted to choose a business model that.

Speaker Change #153: That didn't align with our business model.

Speaker Change #154: We're a product company and our largest hyper scaler wanted a custom solution uniquely designed for them.

Speaker Change #154: That wouldn't be sellable to anyone else.

Speaker Change #155: It would also include contributing all the intellectual property to them to build that.

Speaker Change #156: And build it in the business model of a contract manufacturer, which would operate in kind of 3% to 5% margins.

Jamie Lerner: and we just looked at that and just said look that that's not our business model, you know, that's more like a, a Flextronics or someone in that business and we worked to try and convince them to go down the line of our products but they were quite convinced they wanted to build something completely custom for themselves and their business model and our business model just didn't align, you know, we just, we don't operate at 3 to 5% margins, we don't contribute our intellectual property to our customers, it just, it wasn't a business model about workforce.

Speaker Change #157: And we just looked at that and just said look that's not our business model that's more like.

Speaker Change #158: Ah flextronics or someone in that business.

James Lerner: And we worked to try and convince them to go down the line of our products, but they were quite convinced they wanted to build something completely custom for themselves. And their business model and our business model just didn't align. We, you know, we just, we don't operate at 3 to 5% margins. We don't contribute our intellectual property to our customers.

And.

Speaker Change #159: We work to try and convince them to go down the line of our products, but they were quite convinced they wanted us to build something completely custom for themselves.

Speaker Change #159: And.

Speaker Change #159: Their business model and our business model just in line.

Speaker Change #160: We don't operate at 3% to 5% margins, we don't contribute our intellectual property to our customers. It just it wasn't a business model that works for us.

James Lerner: It just, it wasn't a business model that worked for us. So they're essentially creating their own, they're rolling their own, so to speak. But yeah, yeah.

Jamie Lerner: So they're essentially creating; they're rolling their own, so to speak, but it doesn't, yeah. Yeah, yeah. And I would say our other hyperscalers are using product. This one hyperscaler is just building something custom, and it's interesting in that their custom build is drastically less efficient than many products that are available commercially, but that they chose to go that path. Okay. All right.

Speaker Change #160: So they're essentially.

Speaker Change #161: We're creating there are rolling their own so to speak.

Yeah.

Speaker Change #161: Yes.

James Lerner: Yeah. And I would say our other hyperscalers are using products. This one hyperscaler is just building something custom.

Speaker Change #161: I would say our other hyperscale is are using product.

Speaker Change #162: This one hyper scalar is just building something custom.

Kenneth Gianella: It's interesting in that their custom build is drastically less efficient than many products that are available commercially, but that they chose to go that path. Okay, all right. And then you made a non-core asset sale here on April 2nd, so after the fiscal year end, and you took the cash proceeds from that and applied them towards the debt. Are we close to any other sales of non-core assets? I know you're still evaluating.

Speaker Change #163: It's interesting in that their custom build is drastically less efficient than many products that are available commercially but they chose to go that path.

Speaker Change #162: Okay.

Jamie Lerner: And then you, you made a non-core asset sale here on April 2nd, so after the fiscal year end, and you took the cash proceeds from that and applied it towards the debt. Are we close to any other sales of non-core assets? I know you're still evaluating. Yeah. I mean, I think it's safe to assume that we're going to look for follow-on opportunities, you know, whether they be in inventory, intellectual property, any non-core asset. I mean, we really see our future in Active Scale and Myriad and the incredible growth in those spaces. And we're going to look at pretty much everything that we've got to get us focused on that use case and everything that we can leverage to reduce our debt and give the company the runway that it needs to fully play out the opportunity and myriad and active scale.

Speaker Change #164: And then you you made a noncore asset sale here on April <unk>. So after the fiscal year and then yes. It is.

Took the cash proceeds from that and applied towards the debt.

Speaker Change #165: Are we are we close to any other sales of noncore assets I know you are still evaluating.

Kenneth Gianella: Yeah, I mean, I think it's safe to assume that we're going to look for follow-on opportunities, whether they be in inventory, intellectual property, or any non-core asset. I mean, we really see our future in active scale and myriad in the incredible growth in those spaces, and we're going to look at pretty much everything that we've got to get us focused on that use case and everything that we can leverage to reduce our debt and give the company the runway that it needs to fully play out the opportunity in myriad and active scale. Okay, and then last question, and I'll let go of the microphone.

Speaker Change #166: Yes, I mean, I think it's safe to assume that we're going to look for follow on opportunities.

Speaker Change #167: <unk> be in inventory intellectual property.

Speaker Change #168: Any non core asset I mean, we really see our future in active scale and myriad and the incredible growth in those spaces and we're going to look at pretty much everything that we've got to get us focused on that use case and everything that we can leverage.

Speaker Change #169: To reduce our debt and give the company the runway that it needs to fully play out the opportunity in myriad enacted scale.

Eric Martinuzzi: Okay. And then last question, and I'll let go of the microphone.

Speaker Change #170: Okay, and then last question and I'll, let go of the microphone.

Ken Gianella: The Q, Q1 outlook, this, we're talking about a, adjusted EBITDA loss of about two million. We talked about the full year, adjusted EBITDA in the range of 15 million plus or minus five. At what quarter do we, are we adjusted EBITDA positive? And at what quarter are we cash from ops positive? Yeah, no, we anticipate that going into Q2 and beyond. This quarter we've just gotten into the reductions and some of the activity that we talked about earlier on the call. And we see a positive outlook for Q2, ramping up into the back half of the year.

Kenneth Gianella: The Q1 outlook, we're talking about an adjusted EBITDA loss of about $2 million. We talked about the full year adjusted EBITDA in the range of $15 million, plus or minus 5. In what quarter are we adjusted EBITDA positive, and in what quarter are we cash from OPS positive? Yeah, no, we anticipate that going into Q2 and beyond. This quarter, we've just gotten into the reductions in some of the activity that we talked about earlier on the call.

Q Q1 outlook. This we're talking about our adjusted EBITDA loss of about $2 million you talked about the full year adjusted EBITDA in the range of $15 million plus or minus five.

What quarter do we are we adjusted EBITDA positive and what quarter are we cash from ops positive.

Speaker Change #170: Yes.

Speaker Change #171: We anticipate that going into Q2 and beyond this quarter, we just gotten into the reductions in some of the activity that we talked about earlier on the call.

Kenneth Gianella: And we see a positive outlook for Q2 ramping up into the back half of the year. And I think it's worth adding that EBITDA is not a function of some, you know, sales growth or steep sales growth; it's more a function of cost containment and cost management. So, you know, we're generating the EBITDA off of Discipline Cost Savings versus Expectations of some type of. [inaudible] Very controlled.

Speaker Change #172: And we see a positive outlook for Q2 ramping up into the back half of the year.

Ken Gianella: And I think it's worth adding that the EBITDA is not a function of some, you know, sales growth or steep sales growth. It's more a function of cost containment and cost management. So, you know, we're generating the EBITDA off of. Discipline, cost savings versus expectations of some type of strong growth, and that's why you see we're flat year over year more or less on revenue, but making a $20 million change in EBITDA, doing that all through very controlled cost management, efficiency, and streamlining in tight partnership with the FTI who's been advising us on how to make that turn.

Speaker Change #172: And I think it's worth adding.

Speaker Change #173: That the EBIT.

Speaker Change #174: Is not a function of some.

Speaker Change #175: Sales growth steep sales growth, it's more a function of cost containment and cost management. So we're generating the EBITDA off of.

Speaker Change #176: Disciplined cost savings versus expectations of some type of strong growth and that's why you see or flat year over year more or less on revenue, but making a $20 million change in EBITDA.

Speaker Change #176: Doing that all through <unk>.

Speaker Change #176: Very controlled cost management.

Kenneth Gianella: [inaudible] Efficiency and streamlining in tight partnership with FDI, who's been advising us on how to make that turn. Got it. Thanks for taking my questions and good luck. Yeah, thanks Eric. Thank you, Eric.

Speaker Change #177: Efficiency and streamlining and tight partnership with <unk>, who has been advising us on how to make that turn.

Eric Martinuzzi: Thanks for taking my questions. In good luck. Yeah, thanks, Sir. Thank you.

Got it thanks for taking my questions and good luck.

Speaker Change #178: Yes, thanks, Sir thank you.

Operator: Thank you, and another reminder to ask a question: press star 1. Our next question comes from Nehal Chokshi with Northland Capital Markets. Thank you and welcome back to Earnings Calls. You mentioned active scale and myriad. You expect that to be the future of business, and that's where your focus is going to be. Given that context, can you give us some sense as far as what was the active scale and myriad revenue for fiscal year 24 and what are your expectations for that to grow to fiscal year 25?

Operator: Another reminder to ask a question. Press star one.

Speaker Change #179: Thank you and another reminder to ask a question press Star one.

Nehal Chokshi: Our next question comes from Nehal Chokshi with Northland Capital of Marklitz. Please state your question.

Chuck <unk>: Our next question comes from Chuck <unk> with Northland Capital markets. Please state your question.

Nehal Chokshi: Thank you and welcome back to Erning's calls. Thanks. You mentioned the active scale. Yeah, you're welcome. You mentioned the active scale of Myriad. Expect that to be the future of business, and that's where your focus is going to be given that context.

Speaker Change #181: Thank you and welcome back to the earnings calls.

Chuck <unk>: Thanks, you mentioned the actual scale yeah, you're welcome you mentioned the actual scale of myriad.

Expect that to be the future business.

Chuck <unk>: That's where your focus is can be.

Chuck <unk>: Given that context can you give us some sense as far as what was the active scale myriad revenue for fiscal year 'twenty four and what are your expectations for that to grow to in fiscal year 'twenty five.

Jamie Lerner: Can you give us some sense as far as what was the active scale of Myriad revenue for fiscal year 24 and what are your expectations for that to grow to the fiscal year 25? Yeah, I mean, currently we only break out revenue by primary storage, secondary storage, service, and support. That may change in the future. But what I can say is Active Scale currently by percentage growth is the fastest growing product in the portfolio. The other thing we're seeing is every time we sell Myriad there's almost 100% maybe too high, but it seems like a near 100% that when you buy Myriad, you buy Active Scale as the data lake.

Operator: Yeah, I mean, currently, we only break out revenue by primary storage, secondary storage, you know, service, and support. That may change in the future, but what I can say is ActiveScale, currently, by percentage growth, is the fastest growing product in the portfolio. The other thing we're seeing is every time we sell Myriad, there's almost a 100%, may be too high, but it seems like a near 100% attach rate that when you buy Myriad, you buy ActiveScale as the data lake, so they go together.

Chuck <unk>: Yes.

Speaker Change #182: Currently we only breakout revenue by primary storage secondary storage service and support.

Speaker Change #183: That may change in the future, but what I can say is active scale currently five percentage growth is our fastest growing product in the portfolio.

Speaker Change #184: The other thing we're seeing is every time, we sell myriad theres almost at.

Speaker Change #185: 100% may be too high, but it seems like a near 100% attach rate that when you buy myriad Hugh by active scale as the data Lake.

Jamie Lerner: So they combine together, and what that does is it drives so much higher ASP for us. And the products given one is all flash and a lot of customers are doing all flash data lakes and all flash high performance. That not only are the ASPs larger, but the margin profile of that customer is much higher than our traditional customer. So we're pretty encouraged. Obviously, we're not leaning into the growth of those products significantly right now.

Speaker Change #186: They combine together and what that does is it drives a much higher ASP.

Operator: And what that does is it drives a much higher ASP for us. And the products, given one is all-flash, and a lot of customers are doing all-flash data lakes and all-flash high performance, not only are the ASPs larger, but the margin profile of that customer is much higher than our traditional customer. [inaudible] So we're pretty encouraged. Obviously, we're not leaning into the growth of those products significantly right now. We just need to get more evidence.

Speaker Change #187: For us.

And the products given one is all flash and a lot of customers are doing all flash data lakes and all flash high performance that not only are the asps is larger but the the margin profile of that customer is much higher than our traditional customer.

So we're pretty encouraged obviously, we're not leaning into the growth of those products significantly right now, we just we need to get more evidenced but <unk>.

Jamie Lerner: We just we need to get more evidence, but right now I don't think we could take on any more myriad trials. There's so much demand for the product. And what we've done, I think, is we've expanded into areas and media and entertainment where store next didn't fit. Store next was never a great fit for visual effects, for rendering, for play out, for transcoding. And myriad fits those really well. And what we're doing now is going to our traditional customers and picking up new workloads that we didn't use to be fit for purpose. And myriad now is and having a lot of success there as we work to become more experts in life sciences in some of these areas that are a bit new to us and become experts more in AI.

Kenneth Gianella: But, Right now, I don't think we could take on any more myriad trials. There's so much demand for the product. And what we've done, I think, is we've expanded into areas in media and entertainment where Stornix didn't fit. Stornext was never a great fit for visual effects, for rendering, for Playout, for Transcoding.

Speaker Change #188: Right now I don't think we can take on any more myriad trials. There is so much demand for the product.

Speaker Change #189: And what we've done I think is we've expanded into areas in media and entertainment where store didn't fit.

Speaker Change #190: <unk> was never a great fit for visual effects for rendering for play out.

Speaker Change #191: For trans coding and marry it fits those really well and what we're doing now is going through our traditional customers and picking up new workloads that we didn't used to be fit.

James Lerner: And Myriad fits those really well. And what we're doing now is going to our traditional customers and picking up new workloads that we didn't use to be fit for purpose, and Myriad now is, and having a lot of success there as we work to become more experts in life sciences in some of these areas that are a bit new to us and become experts in AI. So right now, I would say ActiveScale, the fastest grower in the company.

Fit for purpose.

Speaker Change #192: And myriad now is.

Speaker Change #193: And having a lot of success there as we work to become more experts in life Sciences and some of these areas that are a bit new to us and become experts more in AI.

Jamie Lerner: So right now. You know, I would say Active Scale, fastest-grower in the company, Myriad will probably be right on its heels and I feel pretty comfortable. Myriad will be the fastest-growing product in the company. You know, again, we're still working on getting initial deployments, getting, you know, still a very controlled rollout. But I think those controls will start coming off over the next three to four months as we move to the end of the summer, and you'll see that product rolling out with more velocity.

Speaker Change #194: So right now.

James Lerner: Myriad will probably be right on its heels, and I feel pretty comfortable that Myriad will be the fastest growing product in the company. Again, we're still working on getting initial deployments. It's still a very controlled rollout, but I think those controls will start coming off over the next three to four months as we move to the end of the summer, and you'll see that product rolling out with more velocity. Okay.

Speaker Change #195: I would say active scale fastest grower in the company myriad will probably be right on its heels and I feel pretty comfortable myriad will be the fastest growing product in the company.

Speaker Change #195: Again, we're still working on getting initial deployments getting it.

Speaker Change #195: It's still a very controlled rollout.

Speaker Change #195: But I think those controls will start coming off over the next three to four months.

Speaker Change #196: As we move to the end of the summer and Youll see that product rolling out with more velocity.

Jamie Lerner: Okay. And then, it sounds like there are still hyper-scalers in your revenue that you have reported for 310 million and expecting that to be. Do you expect the hyper-scale revenue to be now flatish or it sounds like the large hyper-scalers still have revenue contribution fiscal first quarter of 24. And so, that's still a bit of a headwind that is going to flow through fiscal 25. Yeah, that had wind; that's correct. We expect that had wind in Q1 numbers here. And, you know, that will turn around with a slight uptick in Q2 going forward. But a year-over-year comparison, the main delta between the two is a decrease in the hyper-scale revenue and a slight increase in our primary storage business.

Speaker Change #196: Okay.

Kenneth Gianella: Thank you. And then it sounds like there's still, um.., hyperscalers in your review, that you reported fiscal year 2024 of $310 million and are expecting that to be – do you expect the hyperscale revenue to be slavish now, or does it sound like the large hyperscalers still have revenue contribution in the first quarter of 2024, and so that's still a bit of a headwind that is going to flow Yeah, that headwind. That's correct.

Speaker Change #197: And then it sounds like Theres still.

Speaker Change #198: Hyper scaler in your revenue.

Speaker Change #199: We reported fiscal year, Jeff or Dan.

Speaker Change #200: 10 million and expecting it to be yes do you.

Speaker Change #201: The hyperscale revenue to be now flattish or it sounds like the large hyperscale. So it's still had revenue contribution in fiscal first quarter of 'twenty four and so that's still a bit of a headwind that.

Speaker Change #201: This is going to flow through fiscal 'twenty five.

Speaker Change #201: Yes that that headwind that's correct, we expect that headwind in Q1 numbers here and.

Kenneth Gianella: We expect that headwind in Q1 numbers here, and that will turn around with a slight uptick in Q2 going forward. But in a year-over-year comparison, the main delta between the two is a decrease in hyperscale revenue and a slight increase in our primary storage.

Speaker Change #202: And that will turn around with slight uptick in Q2 going forward, but a year over year comparison. The main delta between the two is a decrease in the Hyperscale revenue.

Speaker Change #202: And the slight increase in our.

Speaker Change #203: Primary storage business.

Jamie Lerner: Okay. And then, for the balance of the year, basically, I think about 15 million or 20 million year of your decline and your June 2 revenue that you're projecting, you're going to be making that up in the rest of the year. And so, that's going to basically be coming from the growth of Merriott and Akasil, more or less. That plus the store next product. You know, one of the bus thugs where us is we're seeing median entertainment bounce back. And so, that product store next is going to help contribute to that also.

Kenneth Gianella: Okay, and then for the balance of the year, basically, I think about 15 million or 20 million dollars of your decline and your June Q revenue that you're projecting, you're going to be making that up in the rest of the year. And so that's going to basically be coming from the growth of myriad and active scale, more or less. That plus the StoreNext product, you know, one of the best things for us is that we're seeing media and entertainment bounce back, and so that product, StoreNext, is going to help contribute to that also.

Okay.

Speaker Change #204: Then for the balance of the year, basically I think about $15 million or $20 million year over year decline in your June two revenue that youre projecting youre going to be making that up in the rest of the year and so that's going to basically be coming from the growth.

Speaker Change #205: Myriad and ask yourself more or less.

Speaker Change #204: That plus.

The story next product you know one of the bus side for US is we're seeing media and entertainment bounce back and so that that product store next is going to help contribute to that also.

Jamie Lerner: The other piece that we have is we've put a really significant program in place to find ways that we can stabilize our legacy business, predominantly tape, and stem some of those declines that we saw playing through last fiscal year. So, between stabilizing the legacy side of it, making that more profitable, helping that gain at sea legs again, then you have the growth really coming out of Merriott and Active Scale. You know, that combination is where we see FY25 making that pivot back to profitability.

Kenneth Gianella: The other piece that we have is we've put a really significant program in place to find ways that we can stabilize our legacy business, predominantly tape, and stem some of those declines that we saw playing through last fiscal year. So between stabilizing the legacy side of it, you know, making that more profitable, helping that, you know, gain its sea legs again, then you have growth really coming out of myriad and active scale.

Speaker Change #206: The other piece that we have is we've put a really significant program in place to find ways that we can stabilize our legacy business predominantly tape.

Speaker Change #206: Stem some of those declines that we saw playing through.

Speaker Change #206: Last fiscal year, so between stabilizing the legacy side of it making that more profitable helping that.

Speaker Change #207: Gain its sea legs. Again, then you have the growth really coming out of myriad inactive scale that combination is where we see FY 'twenty five making that pivot back to profitability.

Kenneth Gianella: You know, that combination is where we see FY25 making that pivot back to profitability. Okay, and then looking at fiscal year 24 gross margin by revenue line item, it looks like the product gross margin expanded only 200 basis points. A, is that correct and does that signal that there's been some product gross margin pressure outside of the Hyperscale customer has gone away? Let me get the exact answer for you on that. I don't have it at my fingertips right now.

Jamie Lerner: Okay. And then looking at the fiscal year 24 growth margin by revenue line item, the looks like the product growth margin extended only 200 basis points. A, is that correct? And is that, you know, does that signal that there's been some product growth margin pressure outside of the capital customer that has gone away? Okay. Let me, let me get the exact answer for you on that. I don't have that at my fingertips right this second. But I, I, I, I'll say this is a top line, not quoting specifically on the numbers, is that we do anticipate that product is going to start contributing, not as much as we focus more on our subscription based revenue and our services based revenue.

Speaker Change #207: Okay, and then looking at the fiscal year 'twenty four gross margin by revenue line item.

Speaker Change #207: Looks like the product gross margin expanded only 200 basis points.

Speaker Change #208: A is that correct and is that.

Speaker Change #209: Does that signal that there's been some product.

Speaker Change #209: Gross margin pressure outside of the <unk>.

Customer has gone away.

Speaker Change #210: Let me, let me get the exact answer for you on that I don't have that at my fingertips right. This second.

Kenneth Gianella: But I'll say this as a top line, not quoting specifically on the numbers, is that we do anticipate that product is going to start contributing less as we focus more on our subscription-based revenue and our services-based revenue. We expect those segments to tick back up and take on more of the go-forward gross product load in the future because remember, when you switch over to a subscription, you're essentially robbing the product side of it and putting it into service revenue.

Speaker Change #211: I'll say this as the top line not quoting specifically on the numbers is that we do anticipate that.

Product is going to start contributing.

Speaker Change #212: Not as much as we focus more on our subscription based revenue in our services based revenue, we expect those segments to tick back up and take on more of the go forward gross product load in the future.

Jamie Lerner: We expect those segments to take back up and take on more of the, do you go forward, gross product load in the future? Director. Because remember, product, when you switch over to a subscription, you're essentially robbing the product side of it and putting it into a service revenue. Right. Okay.

Because remember product when you switch over to a subscription you are essentially robbing the product side of it and putting it into a service revenue right.

Speaker Change #212: Okay Alright.

Jamie Lerner: All right. Yeah.

Kenneth Gianella: All right, yeah, one last thing is, what's the status on the confidence waivers? So I think right now one of the things that you'll see what we're looking at is that we are expecting to continue to work with our lenders here over the next 60 to 90 days to get that adjusted. We'll have more detail on that in our upcoming filing 10-K. Part of the issue that we're dealing with is under GAAP accounting, not having that clear 12-month agreement in place; we're still working with them.

Ken Gianella: One last thing is that what's the status on the Covenant waivers? So I think right now, and one of the things that you'll see what we're looking at is, you know, we are expecting to continue to work with our lenders here over the next 60 to 90 days to get that adjusted. You know, we'll have more detail on that in our upcoming filing 10-K. Part of the issue that we're dealing with is under GAAP accounting, you know, not having that clear 12-month agreement in place. You know, we're still working with them. And so that's going to be treated as a going concern when that comes out.

Speaker Change #213: One last thing is that what's the status on the covenant waivers.

Speaker Change #214: So I think right now and one of the things that you'll you'll see what we're looking at is we are expecting to continue to work with our lenders here over the next 60 to 90 days to get that adjusted.

Speaker Change #215: We'll have more detail on that in our upcoming fall.

Speaker Change #215: Filling 10-K.

Speaker Change #216: Part of the issue we're dealing with is under GAAP accounting not having that clear 12 month agreement in place we are still working with them and so that's going to be treated as a going concern when that comes out.

Ken Gianella: That said, everyone is being constructive with us. They want to see the same things that we do about, you know, right sizing the business and moving forward. You know, our lenders have generally been supportive with us in the process. And as you saw, we saw sold those assets and used the majority for debt pay down. But with that said, we're actively looking to sell off more non-strategic assets, continue to pay down the debt, and work with our existing or future debt providers for a couple of things. One, we want to look for a more flexible ABL loan, something that gives us even more liquidity flexibility than we have today.

Kenneth Gianella: And so that's going to be treated as a going concern when that comes out. That said, everyone is being constructive with us. They want to see the same things that we do about right-sizing the business and moving forward. You know, our lenders have generally been supportive of us in the process. And as you saw, we sold those assets and used the majority for debt paydown. With that said, we're actively looking to sell off more non-strategic assets, continue to pay down the debt, and work with our existing or future debt providers on a couple things.

Speaker Change #216: That said.

Speaker Change #217: Everyone is being constructed with us they want to see the same things that we do about right sizing the business and moving forward.

Speaker Change #218: Our lenders have generally been supportive with us in the process and as you saw we saw sold those assets and use the majority for debt Paydown.

Speaker Change #219: With that said, we're actively looking to sell off more nonstrategic assets continue to pay down the debt and work with our existing or future.

Debt providers for a couple of things one we want to look for a more flexible ABL loan something that gives us even more liquidity flexibility than we have today and then continue to partner either with existing or future lenders on the longer term loan debt and really expand that horizon.

Kenneth Gianella: One, we want to look for a more flexible ABL loan, something that gives us even more liquidity flexibility than we have today, and then continue to partner either with existing or future lenders on the longer-term loan debt and really expand that horizon of that out beyond the 26 number we see today.

Ken Gianella: And then continue to partner either with existing or future lenders on the longer term loan debt and really expand that horizon of that out beyond the 26 number we see today. So a lot of moving parts on that, and that's why, you know, it's not resolved right now.

Speaker Change #219: That out beyond the 26 number we see today so lot of moving parts on that and that's why it's not resolved right now, but now that we're back on file weeks, but expect to resolve that in the next 60 to 90 days.

Kenneth Gianella: So there are a lot of moving parts to that, and that's why it's not resolved right now. But now that we're back on file, we expect to resolve that in the next 60 to 90 days. Okay, great. Thank you. Thank you. There are no further questions at this time. I'll pass it back to Jamie Lerner for any closing remarks. Sure. Hey, I want to thank everyone for joining us today. It is June 17th. Our quarter ends on June 30th, and we hope to be back to a regular cadence, so we should be back on this call with everyone in the next six weeks with our QI-ONE results. So we'll see everyone then. Thank you. Thank you. And with that, we conclude today's conference. All parties may disconnect at any time.

Nehal Chokshi: But now that we're back on file weeks, but expect to resolve that in the next 60 to 90 days. Okay. Great. Thank you.

Yes.

Speaker Change #220: Okay, great. Thank you.

Speaker Change #220: Thank you there are no further questions at this time I'll pass it back to Jamie Lerner for any closing remarks. Thank you.

Operator: Is there no further questions at this time?

Jamie Lerner: I'll pass it back to Jamie Lerner for any closer remarks. Thank you. Sure.

James Lerner: Sure Hey, I want to thank everyone for joining us today. It is June 17th our quarter ends on June 30th.

Jamie Lerner: Hey, I want to thank everyone for joining us today. It is June 17th. Our quarter ends on June 30th. And we hope to be back to a regular cadence. So we should be back on this call with everyone. And, you know, in the next six weeks' time with our Q1 results. So we'll see everyone then. Thank you.

James Lerner: And we hope to be back to a regular cadence. So we should be back on this call with everyone.

James Lerner: And then the next six weeks time with our Q1 results. So we will see everyone. Then thank you.

Speaker Change #221: Thank you and with that we conclude today's conference all parties may disconnect have a good day.

Operator: And with that, we conclude today's conference. We'll parsing this connect.