Quantum Corporation

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Quantum's financial results for the first quarter fiscal year 2023. 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 call is being recorded. I would now like to turn the conference over to Brian Cabrera from Quantum.

Good afternoon, and thank you for joining today's conference call to discuss Quantum's first quarter fiscal 2023 financial results. I'm Brian Cabrera, Quantum's chief legal and compliance officer. Joining me today are Jamie Lerner, our chairman and CEO, and Mike Dodson, our CFO. This afternoon, we issued a press release, which you can access under the investor relations section of our website, at www.quantum.com we are using a slide presentation in conjunction with today's call and this is also accessible under the same section of our website during today's call our comments may include forward-looking statements all statements other than statements of historical fact should be viewed as forward-looking these statements include any projections of revenue margins expenses adjusted EBITDA adjusted net income, cash flows, backlog, or other financial items. These statements may also concern the expected development, performance, and market share or competitive performance of our products or services. All forward-looking statements are based on information available to Quantum as of today's date. We advise caution in relying on these statements as they involve known and unknown risks and uncertainties we refer to as risk factors. Risk factors may cause our actual results to differ materially from those implied by the forward-looking statements, including unexpected changes in our business. We include detailed information about these and additional risk factors under the sections labeled risk factors in our quarterly report on Form 10-Q and our annual report on Form 10-K. which we file with the Securities and Exchange Commission. We do not intend to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except of course, as we are required by applicable law. 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. If you are unable to listen to the entire call at this time, we will make a recording available for at least 90 days in the investor relations section of our website. 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 today. Earlier this afternoon, we announced results for our first quarter of the fiscal year 2023 with revenue results that exceeded the high end of guidance. Our revenue growth was driven by continued strong hyperscale sales, as well as sequential growth in our video surveillance business. In addition to the strong revenue results, our backlog as of July 31st was $67 million, a near record level. So, demand continues to be strong and we are confident in the prospects for growth. We also delivered our fifth consecutive quarter of growth in the number of subscription customers, now at over 450, which is an increase of 200% year-over-year and 29% sequentially. We are pleased with the progress we have made thus far but this only represents a fraction of the total opportunity that still lies ahead. Currently, we have over 10,000 active customers and 23,000 systems under support contracts, which represents huge potential toward growing recurring revenue over the next few years. As these customers come up for renewal or have a need to refresh their quantum products, they have been very receptive to moving to subscription licensing, most on multi-year contracts. As one example, in May, we closed a large Stornix 7 subscription deal with a well-known shoe and apparel company who has been a customer for many years, using quantum storage solutions to create all of their advertising and marketing content. As they've expanded their brand, The amount of video and image data they are creating has increased, and their legacy infrastructure was constraining their creative teams. To address this need, they upgraded their old StoreNext infrastructure to StoreNext 7, moving to subscription software on a five-year contract, and added F-Series NVMe storage to their infrastructure to provide increased performance and better efficiency. StoreNext software licensing was the largest component of this deal, and this is a great example of how large brands and enterprises are creating more video and image data, as well as a very repeatable sale we can make to our install base of customers around the world. We are also continuing to expand our software offerings and customer adoption of our services technology. StoreNext software is now available for purchase on the Amazon Web Services Marketplace, giving customers a new way to purchase StoreNext and run it on the public cloud. We will be showcasing this new offering later this quarter at the International Broadcasting Conference in Amsterdam. We have close to 1,000 customers that are now using the MyQuantum service delivery platform that we announced in April. And we now have over 2,500 customers and close to 4,000 products connected to our cloud-based analytics software, where we are collecting hundreds of thousands of data points to help our customers improve their operations every day. This service delivery platform enables Quantum to become more connected with our customers, increase the value we are providing, and ultimately monetize these services as we continue to drive growth in recurring revenue. Also during the quarter, some of our largest wins were at international government agencies for national film and sound archives and digital preservation of valuable cultural artifacts. In addition to the size of these opportunities, these wins are also notable because they combine quantum file or object storage software with disk and tape, and in some cases, Cat TV. which is used to index, catalog, and browse the archives. These wins provide a good example of a unique end-to-end architecture for data archiving and digital preservation that only Quantum can provide. I'm also pleased to report that we had a very strong quarter in our video surveillance business, where we had big wins at one of the world's largest transportation companies, as well as wins with transportation authorities for surveillance of public transit systems, universities, hospitals, and casinos. These wins provide further evidence of our success with the Pivot 3 acquisition, while also serving as an example of the large opportunities available to significantly grow this business. As demonstrated this quarter, the business is characterized by large wins And although it may fluctuate from quarter to quarter, we're excited about this initial momentum as we continue to ramp the business. All of these organizations, cloud providers, Fortune 500 enterprises, household brands, hospitals and research institutions, and government agencies around the world, trust Quantum to store, manage, and protect their most valuable assets, their digital data. The products and solutions we provide are more relevant than ever with the exponential growth in video and unstructured data that is mission critical to these organizations. With the strong position we have at these accounts, combined with our large install base of customers, we are poised to significantly grow recurring revenue over the next few years while driving improved margins and more predictable revenue streams. In summary, I believe we have taken the necessary steps to position Quantum for continued improvements in our future operating performance. The programs we have put in place to control PPV, manage discounting, and adjust pricing will begin to show more meaningful results in fiscal Q2, in which we expect to deliver sequential improvements in both gross margin and EBITDA, as Mike will discuss. Demand remains strong with backlog currently at record levels. We are continuing to increase the conversion rate of customers to a subscription level and build our recurring revenue. We are committed to disciplined execution on our initiatives, delivering improvements in gross margin, and reducing operating expenses that are collectively expected to result in substantial year-on-year improvements to adjusted EBITDA over the coming quarters. Now, I'd like to turn the call over to Mike to provide more detail on the results. Then we can take questions. Mike?