Quantum Corporation (QMCO) Q2 2025 earnings summary

Executive summary

• Q2 FY25 revenue was $70.5 million, down 7% year-over-year, mainly due to lower primary storage sales and a shift to subscription-based offerings.

• GAAP net loss for Q2 was $13.5 million, or $2.82 per share, compared to $3.3 million, or $0.70 per share, in the prior year, reflecting lower gross profit and higher non-recurring expenses.

• Adjusted EBITDA was approximately breakeven at -$0.3 million, improving from -$3.1 million in the prior quarter, with nearly $40 million in total savings since FY23.

• Subscription ARR grew 28% year-over-year to $19.6 million, with over 88% of new unit sales being subscription-based.

• The company completed a 1-for-20 reverse stock split in August 2024, reducing outstanding shares to approximately 4.8 million.

Financial highlights

• GAAP gross margin for Q2 was 41.5%, up 490 basis points sequentially, with non-GAAP gross margin at 41.7%.

• Non-GAAP operating expenses were $30.4 million, down 9% year-over-year and flat sequentially.

• Interest expense rose to $6.1 million due to higher effective rates on term loans.

• Cash and cash equivalents were $17.0 million as of September 30, 2024.

• Outstanding term loan debt was $104.7 million, with revolving credit facility borrowings at $28.4 million.

Outlook and guidance

• Q3 FY25 revenue is expected to be $72 million ± $2 million, with non-GAAP operating expense at $31 million ± $1 million.

• Non-GAAP adjusted net loss per share for Q3 is projected at -$0.75 ± $0.05; adjusted EBITDA is expected to be $2 million.

• FY25 revenue guidance is $280 million ± $5 million, with adjusted EBITDA of $3 million ± $2 million, reflecting a $10 million improvement over the prior year.

• Positive free cash flow is anticipated in the second half of FY25 and for FY26.

• Management expects continued pressure on product revenue as the business transitions to subscription-based models.