Q3 2025 Quantum Corp Earnings Call
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Greetings and welcome to the quantum Corporation fiscal third quarter 2025 earnings conference call and webcast. At this time all participants are in a listen only mode. If anyone should require operator assistance. Please press star zero on your telephone keypad.
I shouldn't answer session will follow the formal presentation.
You may be placed in the question shoot anytime by pressing star one on your telephone keypad.
As a reminder, this conference is being recorded.
Speaker Change: My pleasure to turn the call over to your host Chief administrative officer, Brian Cabrera. Please go ahead.
Speaker Change: Good afternoon, and thank you for joining today's conference call to discuss Quantum's third quarter fiscal 2025 financial results I'm, Brian Cabrera Quantum's, Chief administrative officer speaking first today is Jamie Lerner, our chairman and CEO, followed by Kenzie and L O our CFO.
Speaker Change: We'll then open the call to questions from analysts.
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 flow or other financial operational or performance.
Speaker Change: Topics.
Speaker Change: These statements involve known and unknown risks and uncertainties, we've referred to as risk factors.
Speaker Change: Risk factors may cause our actual results to differ materially from our forecast.
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.
Speaker Change: We do not intend to update or alter our forward looking statements once they're issued whether it's or.
Speaker Change: Whether as a result of new information future events or otherwise except of course as we are required by applicable law.
Speaker Change: Please note that our press release and 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.
Speaker Change: Now I'd like to turn the call over to our chairman and CEO, Jamie Lerner Jamie.
Speaker Change: You, Brian and thank you all for joining us.
Speaker Change: Earlier today, we announced our results for our third quarter fiscal 'twenty 'twenty five.
Speaker Change: Turning to slide four here are some brief highlights from the quarter.
Speaker Change: We finished Q3 25 with $72 $6 million in revenue.
Speaker Change: GAAP gross margin of 43, 8% up 230 basis points quarter over quarter, and adjusted EBITDA of positive $4 $7 million.
Speaker Change: An increase of $5 million quarter over quarter.
Speaker Change: Third quarter revenue increased sequentially and was above the midpoint of guidance as recent bookings momentum and customer wins were converted into realized sale.
Speaker Change: The company made continued progress in shifting to a subscription based model.
Speaker Change: Our subscription air are increased 29% year over year to 23, I'm, sorry, 'twenty $1.3 million.
Speaker Change: With over 90% of new sales in the quarter on subscription.
Speaker Change: Additionally, we achieved a positive adjusted EBITDA of $4 $7 million, surpassing expectations and generating improved free cash flow.
Speaker Change: These results were driven by a 6% year over year reduction in non-GAAP operating expenses and a 230 basis point sequential expansion in gross margin to nearly 44%.
Speaker Change: This reflects the success of the company's self help actions in tandem with a higher valued product mix and a large U S federal deal.
Speaker Change: As part of our broader transformation, our key focus has been significantly reducing outstanding debt.
Speaker Change: But achieve financial independence, and eliminate constantly interests and fees.
Speaker Change: To support that the company entered into a standby equity purchase agreement with a new financial partner.
Speaker Change: During access to additional capital and liquidity on favorable terms.
Speaker Change: This strategic move will strengthen the balance sheet.
Speaker Change: Lower the cost structure through a staged debt reduction and.
Speaker Change: And provide greater flexibility to accelerate growth initiatives.
Speaker Change: The company is progressing with its transformation plan aimed at driving sustainable revenue growth and EBITDA expansion.
Speaker Change: I would like to share notable highlights from the quarter.
Speaker Change: Secondary storage revenue grew 15% year over year, largely driven by the success of the new Dx side data protection appliances.
Speaker Change: Which were significantly designed with cyber security features.
Speaker Change: Longtime customers, who have depended on quantum's backup and recovery solutions for years are now upgrading their systems to leverage the efficiencies of the newly launched Dx side appliances.
Speaker Change: A key highlight was winning a large multimillion dollar deal with a top European retailer.
Speaker Change: We are also winning new business by offering highly competitive solutions in the market.
For example, a major American multinational technology manufacturer chose quantum for their global backup and recovery strategy day.
Speaker Change: Deployed a pair of D. N signed 92, hundreds with plans for a scalar tape library for secure archiving and multiple DSI T series appliances.
Speaker Change: Or remote locations wrapped locating to the U S site for disaster recovery.
Speaker Change: Quantum was selected over a point product vendor due to its ability to provide peer backup and archive solutions.
Speaker Change: Robust security features and strong international support capability.
Speaker Change: Alongside our traditional backup and recovery solutions, our archive solutions continue to grow at substantial deal sizes based on petabyte scale data needs.
Speaker Change: We secured a seven figure deal with a Japanese research Informatics Institute.
Speaker Change: This existing active scale customer required a significant capacity expansion, adding over 10 petabytes of storage.
Speaker Change: Although the expansion had to be put out to bid with multiple object storage vendors.
Speaker Change: The Institute chose to stay with quantum due to prior satisfaction and our technology advantage with dynamic data placement to optimize throughput and protect against data loss.
Speaker Change: Next.
Speaker Change: <unk> service provider in South Africa transition from a competitive object storage solution the quantum active scale cold storage.
Speaker Change: To manage over 10 petabytes of data.
Speaker Change: The large scale of data.
Speaker Change: Two an archived requirement.
Speaker Change: For over half a million dollars with quantum go offering a pay as you go subscription model to meet their budgetary needs.
Speaker Change: Okay.
Speaker Change: Marriott continues to be on the forefront of innovation as we collaborate with a leader in the advancement of AI currently using quantum computing inspired algorithms.
Speaker Change: And AI ml to tackle problems once deemed unstoppable.
Speaker Change: Marriage unique architecture provides scalability and performance they will need to support their relentless.
Speaker Change: Pursuit of speed.
Speaker Change: To accelerate development of their next Gen AI and deep learning capabilities.
Speaker Change: The company remains committed to improving operational efficiency, while focusing on accelerating growth and EBITDA expansion.
Speaker Change: By our recently launched products that offer higher margins.
Speaker Change: This aligns with our goal of addressing customer needs for comprehensive data lifecycle management.
Ken: Now I would like to turn it over to Ken to walk through our financial results in more detail Ken.
Ken: Thank you Jamie Please turn to slide seven and I'll provide an overview of the GAAP financial results for our fiscal third quarter.
Ken: Revenue was $72 6 million, an increase of approximately 1% year over year and up approximately 3% from the prior quarter booked.
Ken: Bookings for the quarter were slightly better than our expectations as we continue to convert recent customer wins into realized sales.
Ken: Backlog also began to normalize and finished the quarter at approximately $9 3 million, which is at our target run rate of 8 million to $10 million, even though supply chain lead times still remain extended in certain areas.
Ken: Our GAAP gross margin for the period expanded 320 basis points to 43, 8% from 46% in the year ago quarter, and 230 basis points from 41, 5% in the prior quarter.
Ken: The increase in gross margin reflects our ongoing efforts to drive improved product mix towards our higher margin higher value solutions combined with stronger royalty revenue in the quarter.
Ken: GAAP net loss for the third quarter with $71 4 million, which included a noncash charge of a negative 61 6 million related to the fair market value of warrant liabilities, resulting from the significant increase in our stock price during the quarter as well as a positive noncash impact.
Ken: <unk> of $1 2 million intercompany foreign currency.
Ken: <unk>.
Ken: This compares GAAP net loss of $9 9 million or a loss of $2 eight per share in the prior fiscal quarter.
Ken: Now turning to slide eight for non-GAAP metrics.
Ken: non-GAAP operating expenses were $30 1 million in the third quarter.
An approximate 6% reduction from the 32 million last year and down approximately 1% from the prior quarter.
Ken: This continued reduction in operating expenses is the result of our proactive self help actions to improve process and productivity and we expect to maintain operating costs at or below these levels in the fourth quarter as ongoing cost containment actions take hold.
Ken: Adjusted EBITDA in the third quarter was a positive $4 7 million compared with a negative $2 6 million in the prior year third quarter, and a negative zero point $3 million in the prior quarter.
Ken: This represents a $7 3 million dollar improvement year over year, and a 5 million dollar improvement sequentially.
Ken: It reflects the benefits of higher quality of revenue mix combined with our ongoing operational improvements.
Ken: As mentioned last quarter, and it's worth reiterating again, our total savings from our operational initiatives have resulted in an almost $40 million of savings since the end of FY2023.
Ken: In addition to our focus on improving EBITDA and total profitability. We also continue to prioritize annual recurring revenue, which we expect to be a key driver for delivering increasing profitability over time.
Ken: Moving to slide nine I want to briefly highlight our annual recurring revenue and subscription metrics and the progress, we're making towards driving higher quality revenue.
Ken: Total annual recurring revenue or a R. R for the trailing 12 months was approximately 49% of our total revenue at $141 million with a gross margin on the combined business being approximately 67%.
Ken: As a company we continue to focus on our total subscription T C D and subscription a R. R by maximizing our quantum subscription opportunities to both our partners and customers globally.
Ken: This quarter, we have another positive indicator that demonstrates our progress on subscription are are with the third quarter, increasing approximately 29% year over year, and approximately 9% sequentially to $21 3 million with over 90% of new unit sales in the quarter being subscription based.
Ken: Continuing this rotation and focus on total recurring revenue is a key element of our long term business model and driving increased profitability and cash flow.
Ken: Now please turn to slide 10 for an overview of the debt and liquidity at the end of the quarter.
Ken: Cash cash equivalents and drifted cash at the end of the third quarter were approximately $20 6 million.
Ken: Outstanding debt split between term and our revolver was $105 9 million and $37 5 million respectively.
Ken: As of quarter end, the company's net debt position was $133 million.
Ken: Turning to slide 11, as Jamie previously mentioned one of our highest strategic priorities has been to improve the company's overall cost structure, including significant reduction in our outstanding debt.
Ken: Quantum has made substantial efforts over the last year to improve our operational and financial health through a combination of revenue and margin improvement plans financial and organizational restructuring and cost reduction initiatives.
Ken: We have been exploring several alternatives to pay down our current outstanding debt, which would also help to lower our cost structure, including lowering the interest expense and other fees the company has incurred.
Ken: These actions combined with improving our operating free cash flow strengthened quantum for its future success.
Ken: Subsequent to quarter end, we announced a standby equity purchase agreement with York drove advisors as a strategic financial partner.
Ken: This agreement gives quantum the right to access additional capital at the company's discretion over a three year period.
Ken: As part of the agreement. The initial tranche is limited to 1.15 million shares or $19, 99% of outstanding shares with the remainder requiring shareholder approval.
Ken: In support of Quantum's effort to strengthen our balance sheet. The company's existing lenders have provided covenant forbearance for both fiscal Q3 2025 in fiscal Q4 2025.
Ken: As we work towards shareholder approval.
Ken: Turning to slide 12, let me close out the company's guidance for the fourth fiscal fourth quarter and an updated view of fiscal 2025 overall.
Ken: First we are reiterating our previously full year financial revenue guidance of $280 million, plus or minus $5 million, which contemplates fourth quarter total revenue of approximately $66 million plus or minus $2 million.
Ken: The fiscal fourth quarter, primarily reflects the normal calendar first quarter seasonality.
Ken: Potential impact from supply chain headwinds that may occur.
Ken: We expect to hold fourth quarter, non-GAAP operating expenses effectively flat at $30 million, plus or minus $1 million, reflecting a significant cost reduction actions we've taken over the last two years.
Ken: As a result, non-GAAP adjusted net loss per share for the fourth quarter is expected to be a negative $1 16.
Ken: Or minus five cents per share based on an estimated five 8 million shares outstanding.
Ken: Our outlook for the full year adjusted EBITDA continues to be $3 million, plus or minus $1 million, which con templates fourth quarter, adjusted EBITDA of approximately $1 $7 million.
Ken: The midpoint of our EBITDA guidance represents a significant year over year improvement of approximately $8 million, both on a quarterly and on a full year basis.
Jamie Lerner: With that I'll now hand, the call back to Jamie for closing remarks.
Jamie Lerner: Thank you Ken.
Jamie Lerner: In closing this quarter quantum has clearly demonstrated the benefits of our self help initiatives.
This includes driving a higher quality of revenue and profitable growth at.
Executing on improving our operational process and productivity.
Jamie Lerner: Bind with significant steps towards being cash flow positive and moving the company forward to become debt free.
Jamie Lerner: While we continue our financial transformation, we remain focused on driving new and innovative products into the marketplace, improving our customers' experience and leveraging our global footprint to improve our overall service model.
Jamie Lerner: With the recently secured agreement and access to additional capital. We believe we are increasingly well positioned to fully execute our business strategy and realized growth in revenue and profit and profitability over the coming year.
Jamie Lerner: I'll now hand, the call back to the operator for questions.
Jamie Lerner: Operator.
Speaker Change: Thank you and I'll be conducting a question and answer session.
Speaker Change: If you like to be placed in the question queue. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star two if you'd like to move your question from the Q1 moment. Please while we poll for questions.
Speaker Change: First question is coming from Eric Martin, who see from Lake Street. Your line is that life.
Yes, congrats on the year over year improvement.
Speaker Change: Our revenues back in a positive comp and certainly the sequential EBITDA improvement is notable.
Speaker Change: I wanted to talk first off about the.
Speaker Change: People are the is the.
Speaker Change: Purchase arrangement that you got with Yorkville, just curious to know you know how how will this actually work I saw was declared effective yesterday, but.
Speaker Change: Whether you'd be taking action prior to a shareholder approval when do you expect shareholder approval to some high level comments would be welcome.
Speaker Change: Yeah, I'll I'll start and let can get into the mechanics of it.
Speaker Change: We haven't announced anything yet in terms of whether or whether or not we're going to sell against this elon.
Speaker Change: But.
Speaker Change:
You know I think it's a really good tool for the company to raise capital under very efficient terms and you know we've announced what our strategy is for this year and there is several things we wanted to achieve one we wanted to get the company to be debt free.
Speaker Change: Finally, we want to stop burning cash and make cash and were getting very close to that we think this year, we'll cross over to where we're no longer a cash consumer but a cash producer.
Speaker Change: And finally, we think this is the year, where we've stemmed some of the declines in our business and we go back into growth mode. And this is just the tool at our disposal to give us some of that growth capital as well as pay down debt.
Speaker Change: That will allow us to meet those objectives.
Speaker Change: But nothing has been announced.
Speaker Change: When or how we're going to use that that'll be forthcoming and that's a board decision.
Speaker Change: Ken I don't know if you have any comments about the instrument.
Speaker Change: And I think he covered or Jamie you know, we work with our board.
Speaker Change: Financial advisors in and make sure it's right.
Speaker Change: As Jamie said it is a great tool that we now have with us to operate the company and help manage our liquidity and working capital and pay down debt as we go so well.
Speaker Change: We'll let you guys know more as we go.
Speaker Change: Okay and then.
Speaker Change: Just curious to know you talked about the temporary manufacturing headwinds as part of the reason for the guidance that you gave.
Is this a continuation of the prior quarter issues that you described or is there any tariff impact to the guidance here.
Speaker Change: Yeah, I mean, it's a number of factors.
Speaker Change: One is we are beginning to manufacture the new ice seven product and we've got a fair amount of demand for it and some of the parts are just long lead time parts. So whenever you start manufacturing a new product you got it you have to kind of iron out your line iron out here.
Speaker Change: Supply chain and really figure out what the right demand signal is I mean, we've never really.
Speaker Change: Sold it and made it before so it's al.
You know I would say estimates so we're going through that secondly, I mean, we have.
Speaker Change: <unk> had the concerns of what happens if tariffs are turned on what happens if tariffs are turned off so that that always is a concern I mean, you know so far it's been smooth sailing, but there's just always that concern.
Speaker Change: You know many of the products, we buy from Dow and Supermicro and others are made in Mexico and products, we have and we manufacture in Mexico. So you just have those concerns.
Speaker Change: You know I think if all of that is smooth we're gonna be you know we expect to be at the higher end of our range, but we just have to see how the next couple of weeks play out it's certainly been.
Speaker Change: You know touch and go with some of the geopolitical stuff.
Speaker Change: Got it thanks for taking my questions.
Speaker Change: Thank you. Your next question is coming from me all trustee from Northland Capital markets. Your line is now live.
Speaker Change: Thank you and congrats on a really nice.
Speaker Change: The surprise that's great to see.
Speaker Change: Hum.
Speaker Change: Yeah.
Speaker Change: You mentioned you had a large U S federal deal.
Speaker Change: Was it across the whole product portfolio or was it a focus to a certain product.
Speaker Change: Yeah I mean.
Speaker Change: We started about two years ago really focusing on the high margin and highly differentiated parts of our portfolio.
Speaker Change: And.
Speaker Change: Our work with the U S government, particularly with various defense and intelligence agencies are a big part of what we do so products that are really strong. There are are very high speed analytic platforms. The storage that sits behind.
Speaker Change: You know very high speed and very high secure.
Speaker Change: Planning research and analysis algorithms.
Speaker Change: Also a lot of our portfolio is.
Speaker Change: <unk> focused on.
Speaker Change: Cyber security for very secure environments.
Speaker Change: And we have an element of our portfolio that are shipboard systems, they're designed to be deployed in naval environments. Their shock and vibe tested there humidity tested to be put on board a ship.
Speaker Change: And all of those parts of the portfolio had been doing really well and especially in the area, that's kind of new to us.
Speaker Change: In terms of a growth area has been the national laboratories as well as.
Speaker Change: And.
Speaker Change: The one thing that's gone we didn't really understand initially there were certain systems, we sold to the U S. Certain U S defense agencies.
Speaker Change: That many other nations replicated the exact same system, making it very easy to communicate between groups.
Speaker Change: And so some of the initial sales we had into the U S. Government. We ended up getting other coalition Nations G. Seven nations buying copycat systems because of the ease of integration and coordination. So all of those things have been going well for us and what we think.
Speaker Change: We can really grow a lot more in that area.
Speaker Change: Yeah, let me add on to that Jamie when you look at the higher quality of earnings that we're having we're on track to have the best year in fed since our 'twenty to fiscal 'twenty, two and fed year over year was up 54%. So you know the effort that the team and the company has put in as Jamie said on me.
Speaker Change: These higher quality.
Speaker Change: Earnings type of products are it's it's you know, we're showing proof points coming through them.
Speaker Change: U S that is a great data point for that.
Speaker Change: Okay, that's great.
Speaker Change: Ken.
Ken: So your Opex for the December quarter was $30 5 billion non-GAAP basis, and you're guiding to $30 million.
Speaker Change:
Speaker Change: And that does reflect significant cost take out relative to a year ago.
Speaker Change:
Speaker Change: Is there more cost take out that we should be.
Speaker Change: Anticipating or are we now.
Speaker Change: At the maximum cost takeout.
Speaker Change: No I think that you know theres always room to optimize within an organization and we're going to continue to find those waves. The majority of our efforts I think are substantially complete.
Speaker Change: Calendar Q1 for all companies that tends to be a little bit higher opex quarter, just because you start payroll taxes and certain elements like that come back into play.
Speaker Change: We will still continue to look for efficiencies, but I think the majority of it is it is on track and completed substantially complete.
Speaker Change: So just to be clear I mean, the appropriate is for opex that we should be modeling would be about 30 million a quarter here.
Speaker Change: That's that's what we're guiding folks too right.
Yep, Okay great.
Speaker Change: Alright, and then thoughts on backlog trajectory for the March quarter.
Speaker Change: We're guiding to exactly.
Speaker Change: Yeah.
Speaker Change: Yeah, we we we start giving people the eight to 10 is what we're targeting for within within our number.
Speaker Change: Okay got.
Speaker Change: Got it.
Speaker Change:
Speaker Change: And then okay.
Speaker Change: If you could give us just dig.
Jeffrey: Demand charge Jeffrey in terms of bookings for the December quarter for your four key products a myriad of active scale.
Jeffrey: The recently lost all flush stages appliance and take.
Jeffrey: Yeah.
Jeffrey:
Jeffrey: Yeah, I think there's strength in a in a variety of areas that covers a lot of ground I mean, where we surged ahead of our competition is in data protection.
Jeffrey: We work.
Jeffrey: The all flash.
Jeffrey: Data deduplication and data compression backup targets and the Dx side portfolio and we do have the largest centralized.
Jeffrey: Replication target and backup target.
Jeffrey: With the deal signed 9200, which as you know well over two petabytes of storage in a single system.
Jeffrey: And we've announced some even bigger all flash systems, so that the portfolio just.
Jeffrey: Has continued to grow really well I think we've seen more normalization in media and entertainment with a lot of strength in sports.
Jeffrey: Sports.
Jeffrey: And a lot of strength in episodic.
Jeffrey: So you know I would say storing AXT is running at historical highs.
Jeffrey: In tape, what's interesting is the demand on the ice Devin.
Jeffrey: This is kind of a pretty amazing new product that is 2008 tape cartridges and a standard rack.
Speaker Change: No one has achieved anything even close to that.
Jeffrey: It is the highest.
Speaker Change: <unk> is the largest and most dense.
Speaker Change: Storage appliance ever built by man.
Speaker Change: It just it and.
Speaker Change: It's a pretty incredible piece of innovation, even though a lot of us are probably thinking takes a pretty old thing.
But I think it is captured People's imagination.
Speaker Change: In that there's a there's just a new mindset now in the world.
Speaker Change: You know, where you can analyze everything and anything in ways no one thought.
Speaker Change: Mindset as we better keep every single piece of data we've ever created.
Speaker Change: And the <unk> seven is the most efficient way for a large enterprise.
Speaker Change: Keep every piece of data they've ever collected created come across and do it in a very cost effective way.
Speaker Change: You can do it at prices lower than any cloud provider you can do with it.
Speaker Change: There's just no one who can do it cheaper than plugging in these seven so seeing the demand for that has been really really interesting.
Speaker Change: And you know as it relates to myriad we continue to work with thought leaders. We are working with some of the world's most advanced quantum computing companies that have this voracious demand for high speed storage and particularly quantum computers are being used for encryption and very very very it.
Speaker Change: Vance and computationally and storage intensive encryption and we've been working with the companies are in that area and working with a variety of life Sciences companies.
Speaker Change: In and around our analytics use cases with Marriott as we get that product to continue to scale. We had some press releases about what we're doing scale wise and some of the AI specific functions, we're adding to increase its.
Speaker Change: Work with Nvidia Gpus, and how it takes advantage of Gpus. So.
Speaker Change: I'm pretty pleased with how all of that is going I think after seven years of really hard work I think we've got a portfolio that.
Speaker Change: It's very differentiated very unique and just about every product has been entirely refreshed now some investors have looked at that and said that's caused you to spend a lot of money. That's caused you at times to be cash flow negative.
Speaker Change: And we consciously made those investments.
Our investors know that we had a very old company with old products and we had to do.
Speaker Change: You know dig in deep with some lenders.
Speaker Change: To spend the money to refresh these products, but this is the year, where we're committing and we're pretty confident.
Speaker Change: That the company because of these investments moves into a growth mode.
Speaker Change: We switched from investing money entities products to generating money from these products and we go back into growth mode, and I think with that.
Speaker Change: We've indicated and we'll share more data that we have a variety of let's just call them irons in the fire.
Speaker Change: Where we're going to remove our debt.
Speaker Change: And that is millions of dollars of interest we pay per quarter and when we resolve that debt.
Speaker Change: I mean, you don't have to do a lot of heavy math to see how much cash the company generates when we no longer have these heavy interest payments.
Speaker Change: And you bring all that together, we're pretty excited about what we're looking at going forward.
Speaker Change: Yeah, absolutely portion.
Speaker Change: And thank you for all that color Jamie that was really great. Just one real quick when you talked about being in a position to be in growth going into fiscal year 'twenty six of these products, which one do you think will have the biggest dollar increase.
Speaker Change: You know, we don't break out product lines.
You know I would say.
Speaker Change: We're seeing we really talk about our portfolio in terms of primary and secondary and we are driving growth on both sides. Obviously myriad is the growth driver in primary and really the I seven and DSI are the growth drivers in secondary and whats interesting interesting about active scale.
Speaker Change: We can have S. Three object stores that are primary incarnations as all flash and they can be secondary incarnations, whether they cheered at tape. So that product is it's pretty interesting in that it can be used in high speed use cases, as well as backup and data protection use cases so.
Speaker Change: Short answer we expect growth both in primary and secondary.
Speaker Change: To meet our objectives.
Speaker Change: And Jamie just to add some proof point for that to get some proof points to that number like store next it's up almost 50% year over year and all of those refresh portfolios that January was talking about you know beyond seven Dx side all of those are on positive trajectories on a year over year basis.
Speaker Change: So.
Speaker Change: Definitely the investment is paying off.
Speaker Change: Okay, Great and then I just wanted to double click onto the Dx side here in terms of the competitive landscape. You know clearly there are laws are all flash array primary storage vendors and there are some of these backup.
Speaker Change: Software only vendors they are partnering with those all flash arrays to potentially effectively replicate what you guys do but is it fair to say that that's not really the target market, it's really more the the.
Speaker Change: Customers, who desire and want a turnkey appliance that has typically been hard drive based.
Speaker Change: Well.
Speaker Change: I mean, when you need to back up your most.
Speaker Change: <unk> is an important data you'll have a couple of choices right.
Speaker Change: The big incumbent players.
Speaker Change: I B M has products in that area Dal has products in that area smaller vendors have products in that area, none of them offer all flash wait.
Speaker Change: The one side.
Speaker Change: Product 70 to one.
Speaker Change: Do you do population just that is not a lot.
Speaker Change: Certainly not in months.
Speaker Change: Now there are.
Speaker Change: Other people would say yes.
Speaker Change: On a pure storage would say sure you can back up against us and they have an all flash appliance that is three to four times more expensive than any of us operate in the backup space and they don't have anywhere near the efficacy of deduplication that a product like <unk>.
Speaker Change: A variable length deduplication algorithm like the Exxon has.
Speaker Change: It's not really apples to apples I mean, taking a ah.
Speaker Change: A very poor compression algorithm and a very poor do you duplication algorithms in an all flash bundle and putting it you know putting it on an all flash supermicro box.
Speaker Change: It doesn't give you the same outcomes so it's not.
Speaker Change: That its package, that's an appliance because we solve the DSI software by itself with someone wanted that.
Speaker Change: But it's building your product to take advantage of N V. M E storage and that takes a lot of engineering, rather than just hey, Plunkett down on an all flash box I mean, you have to reengineer your product to take advantage of.
Speaker Change: All of the Pcie lanes and take advantage of.
Speaker Change: You know.
Speaker Change: Speaking to nvme natively versus treating it like it's a hard rock.
Speaker Change: And that's why you know the others have talked about it but that does not have all flash data domain products.
Speaker Change: I B M does not have all of our all flash de duplication products hits.
Speaker Change: Hitachi does not have that net app does not have that.
Speaker Change: There just are not major storage vendors that have that technology available today I assume they'll chase us.
Speaker Change: But they don't have it today, certainly smaller vendors like an exit grid don't have anything like that today.
Speaker Change: And we're just taking share.
Speaker Change: Technology.
Speaker Change: And how how big is that market overall, you think.
Speaker Change: I mean, its enormous right I mean.
Speaker Change: We we participate in very small percent, we have a few percentage points of this market. You know this is a market that's measured in many many billions I I don't have the latest Gartner number in front of me, but it's tens of billions.
Speaker Change: And.
Speaker Change: But we don't play in the whole market you know we play against certain areas in that market, we've been very successful in financial services.
Speaker Change: We've been very successful in Europe, our European team is just incredibly well with that our Asia team has done really well and now you know we put a lot of focus on making movies and television and sports I mean, that's what our storage really did in the U S and now we're building that muscle back in <unk>.
Speaker Change: America, how to not just help people make movies, but how to backup data as well and that's a big part of what we do.
Speaker Change: Great. Thank you thanks for taking all my questions.
Jamie Lerner: Thank you we've reached end of our question and answer session was a chunk of floor back over to Jamie for any further or closing comments.
Jamie Lerner: Well listen thank you everyone. We're excited about what lays in front of US you know our goals are pretty simple we need to get cash flow positive. This year, we need to rent with turned to growth this year.
Jamie Lerner: And we want to do some clever in negotiation to.
Jamie Lerner: To move to a debt free company.
Jamie Lerner: And by doing that we think we have a very different outcome than.
Jamie Lerner: We've seen in the past.
Jamie Lerner: And I want to end with a final comment.
Jamie Lerner: <unk>.
Jamie Lerner: The name Quantum Corporation was created a 1979.
Speaker Change: And this company went public in either 1983 or 1984, so I find it.
Jamie Lerner: A little humor that I'm, making this clarification.
Jamie Lerner: But we are not a quantum computing startup.
Jamie Lerner: Our data storage company, that's been traded publicly since 1983 1984 going on 40 years. So if there is any confusion. Let me ended here our data storage company, we definitely worked with quantum computing companies and we help them store their data, but we do.
Jamie Lerner: Not build quantum computer.
Jamie Lerner: With that thanks, everyone and we'll talk to you.
Jamie Lerner: In 90 days.
Jamie Lerner: Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day we thank.
Jamie Lerner: Thank you for your participation today.
Jamie Lerner: Yeah.
Jamie Lerner: Yeah.