Quantum Corporation

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Quantum's financial results for the second quarter fiscal 2022. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to Brian Cabrera from Quantum. Please go ahead.

Good afternoon, and thank you for joining today's conference call to discuss Quantum's second quarter fiscal 2022 financial results. I'm Brian Cabrera, Quantum's Chief Legal and Compliance Officer. Joining me today are Jamie Lerner, Chairman and CEO, and Mike Johnson, CFO. This afternoon, we issued a press release, which you can access a copy of on Quantum's website at www.quantum.com under the Investor Relations section. There is also a slide presentation that we will be using in conjunction with today's call that may be accessed through the webcast link on the IR website and is also posted as a PDF in the investor relations section. As a reminder, comments made during today's conference call may include forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. Quantum advises caution and reliance on forward-looking statements. These statements include, without limitation, any projections of revenue, margins, expenses, adjusted EBITDA, adjusted net income, cash flows, or other financial items. Also, any statements concerning the expected development performance and market share or competitive performance relating to products or services. All forward-looking statements are based on information available to Quantum on the date hereof. These statements involve known and unknown risks, uncertainties, and other factors that may cause Quantum's actual results to differ materially from those implied by the forward-looking statement, including unexpected changes in the company's business. More detailed information about these risk factors and additional risk factors are set forth in Quantum's periodic filings with the Securities and Exchange Commission. These risk factors include, but are not limited to, risks and uncertainties listed in the section entitled Risk Factors in Quantum's quarterly report on Form 10-Q and annual report on Form 10-K as filed with the FCC. Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information future events, or otherwise, except as required by football law. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP. Included in the company's press release are definitions and reconciliations of GAAP to non-GAAP items, which provide additional details. For those of you unable to listen to the entire call at this time, A recording will be available for at least 90 days in the investor relations section of Quantum's website. Now I would like to turn the call over to the Chairman and CEO, Jamie Lerner. Jamie?

Thank you, Brian, and thank you all for joining us on today's call. Earlier today, we announced strong results for our second fiscal quarter with revenues that exceeded the high end of our guidance. Customer demand remained robust during the quarter, demonstrated by the material increase in our backlog, which grew sequentially to $50 million from $30 million last quarter. Increased traction with our hyperscale customers continued as we delivered a third consecutive quarter of sequential order growth. We also demonstrated progress in our software businesses and saw continued momentum in our subscription and services backlogs. The ongoing industry supply constraints improved during the quarter, but still restricted our ability to meet all end customer demand. We anticipate supply chain will see further improvement in our third fiscal quarter, which should allow the company to see a sequential reduction in current backlog levels. In the second quarter, we saw another quarter of revenue acceleration within our software and subscription customers, which grew 30%, albeit from a small base, but equally impressive was our bookings, which grew more than 70% sequentially. Our Cat TV product line delivered the second consecutive quarter of increased bookings with traction across sports, entertainment, and enterprise markets, demonstrating our ability to cross-sell quantum solutions to customers with multiple needs and applications. On the product and technology front, we completed the acquisition of Pivot3's video surveillance business and recently announced the acquisition of mCloudN, a hyper-converged startup which will help further establish Quantum as a leading player in the surveillance market. Also during the quarter, we announced major innovations for long-term data archiving and cyber protection. New as-a-service offerings include and a partnership with IBM on the next generation of LTO technology. All of these actions are strategic components to building a complete portfolio of solutions to meet customers' unstructured storage and archiving requirements across multiple end markets. We are pleased that during the quarter, we were recognized by Gartner as a visionary in the 2021 Magic Quadrant for distributed file and object storage, and recognized as the number one brand for secondary storage based on end-user survey results published by Coldago Research. We view the recognitions from third-party research firms as validation of our long-term strategy, with a focus on transitioning towards a higher mix of software and subscription services. One of the key aspects of our long-term transformation is transitioning from selling mostly hardware appliances, as our product mix suggests today, towards selling primarily software and services in a recurring revenue model. Our portfolio of software-based offerings has come a long way in the last two to three years, and we have built a broad portfolio of solutions which targets storing, managing, protecting, and enriching data. In both internal development and strategic acquisitions, our portfolio now includes software which covers numerous aspects of the capture and storage of data, such as indexing, cataloging, and tagging data, high-speed file and block software for ingesting and processing video and images files, object storage software, hyper-converged software for mission-critical surveillance workloads, deduplication software for data protection, and cloud-based AIOps software to monitor all of these operations around the world. Over the last year, we transitioned three of our product lines to software or subscription licensing. In the past, Quantum typically sold customers hardware appliances combined with software. Today, we're now transitioning away from providing appliances towards a subscription-based model in which Quantum software is the key aspect of the overall solution sale. We have roughly 200 customers utilizing software and subscription services, and we anticipate future levels of adoption will continue to accelerate. In the coming quarters, we will be transitioning more products to subscription licensing, including CatDV, DXI deduplication software, and mCloudN hyperconverged software. Our long-term strategic transition towards higher margin software and services is seeing strong initial uptake, and we look forward to sharing additional metrics on this business during our upcoming Virtual Analyst Day on November 9th. We continue to gain both market share and customer traction within hyperscale archive infrastructure. We are now in production with multiple hyperscale and webscale companies and have secured additional design wins and use cases at two major hyperscalers within the last quarter, including a $5 million webscale company win. demonstrating the value Quantum offers in supporting the massive archive needs of these global data BMS. As noted, our backlog has reached a new record level at the end of the second fiscal quarter. And while not all backlog represents potential revenues in the upcoming quarter, our end demand remains robust across hyperscaler customers. One positive that has emerged during the recent industry supply constraints is that we are seeing significantly higher levels of visibility into future revenue contribution from this vertical compared to just a year ago. We have made a few significant announcements in October that speak to our leadership in the hyperscale space and our strategy to offer large data archive solutions to web-scale companies and enterprises. We recently announced active-scale cold storage, which is a new type of storage for active-scale-based systems, which combines quantum tape hardware with patent-pending erasure coding software. In keeping with our long-term transition strategy, we can offer customers the solution as a service. Thus, enterprises will be able to build a large private cloud quickly and effectively in any data center they may choose with a fully managed quantum all-inclusive subscription pricing model. The new active-scale cold storage solution delivers up to 80% savings relative to archiving data on disk and provides much better durability than any other tape-based archiving solution, while practically eliminating the risk of data loss. Also in October, we announced a partnership with IBM on the next generation of LTO technology. Under the terms of the agreement, Quantum will collaborate with IBM in development of LTO 10 tape drives and media to help accelerate the time to market, capacity, and performance of the next generation LTO drives. Earlier this week, we announced our ransomware solution, which provides customers an industry first implementation, which creates a physical block between tape drives and the robotic arm of the typical tape-based system. While simplistic in its design, this additional step, which requires an individual to remove a mechanism prior to drive removal, ensures data storage on tape can provide enhanced protection relative to networking cybersecurity offerings, as drives remain completely offline, secure, and provide the ultimate level of data security for cyber resilient archives. For customers using quantum-based tape drives for archival storage, cyber criminals would have to physically enter the data center to gain access to any data. In total, we believe quantum has established both the market and architectural leadership position when it comes to long-term data archiving and hyperscale customers and now broadening into the enterprise. A key element of our strategy is to expand our addressable market into the largest data storage market, video surveillance. Today, surveillance cameras are the number one generator of data on the planet, and the total number of cameras as well as the resolution required of the cameras, is continually increasing. Overall required retention times of video surveillance data is increasing as well, as organizations are using surveillance data for more than just loss prevention. Combined, all these trends lead to a need for more storage capacity, more infrastructure, more software, and more video analytics. Over the past few months, we made two acquisitions to jumpstart our presence in this market. We acquired the video surveillance business from Pivot3, which brought over 500 customers, including major airports, large hotels, major safe city deployments, and major customers in the energy and utility sector and critical infrastructure. This acquisition also brought an established sales channel along with an expertise in the video surveillance market and key engineering and support personnel for supporting these customers. We also acquired a small hyper-converged software startup based in Bangalore called nCloudN. The company is a startup which has developed hyper-converged software that is both hardware and hypervisor agnostic, so it is much easier to deploy as standalone software running on any white box hardware, and is available today on a subscription model. In summary, we delivered solid financial results, making tremendous progress toward our transformation agenda, and remain poised for a strong second half based on customer order strength, our current backlog, and anticipation that the industry supply constraints will see further improvement during the third quarter. We have clear momentum entering the second half of our fiscal year, and I'm looking forward to our Virtual Analyst Day next week on Tuesday, November 9th, where our executive team can share more about the progress and outlook for our long-term strategy. To talk more about the results, I'd like to turn the call over to Mike Dodson, our CFO, to discuss the financials. Mike?