Quantum Corporation

Greetings and welcome to the Quantum Corporation Fiscal Third Quarter 2025 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Chief Administrative Officer Brian Cabrera. Please go ahead.

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 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 flow, or other financial, operational, or performance topics. These statements involve 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. For more information, please refer to the detailed descriptions we provide about these and additional risk factors under the risk factors section in our 10Qs and 10K 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. 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'd 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 our results for our third quarter fiscal 2025. Turning to slide four, here are some brief highlights from the quarter. We finished Q3 25 with $72.6 million in revenue, gap gross margin of 43.8%, up 230 basis points quarter over quarter, and adjusted EBITDA of positive $4.7 million, an increase of $5 million quarter over quarter. Third quarter revenue increased sequentially and was above the midpoint of guidance as recent bookings momentum and customer wins were converted into realized sales. The company made continued progress in shifting to a subscription-based model. Our subscription ARR increased 29% year over year to $21.3 million, with over 90% of new sales in the quarter on subscription. Additionally, we achieved a positive adjusted EBITDA of $4.7 million, surpassing expectations, and generating improved free cash flow. 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%. This reflects the success of the company's self-help actions in tandem with a higher value product mix and a large US federal deal. As part of our broader transformation, a key focus has been significantly reducing outstanding debt to achieve financial independence and eliminate costly interest and fees. To support this, the company entered into a standby equity purchase agreement with a new financial partner. ensuring access to additional capital and liquidity on favorable terms. This strategic move will strengthen the balance sheet, lower the cost structure through a staged debt reduction, and provide greater flexibility to accelerate growth initiatives. The company is progressing with its transformation plan aimed at driving sustainable revenue growth and EBITDA expansion. I would like to share notable highlights from the quarter. Secondary storage revenue grew 15% year over year, largely driven by the success of the new DXi data protection appliances, which were significantly designed with cybersecurity features. Long-time 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 DXi appliances. A key highlight was winning a large multi-million dollar deal with a top European retailer. 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. They deployed a pair of DXi 9200s with plans for a scalar tape library for secure archiving and multiple DXi T-Series appliances for remote locations replicating to the US site for disaster recovery. Quantum was selected over a point product vendor due to its ability to provide peer backup and archive solutions, robust security features, and strong international support capabilities. Alongside our traditional backup and recovery solutions, our archive solutions continue to grow at substantial deal sizes based on petabyte-scale data needs. We secured a seven-figure deal with the Japanese Research Informatics Institute. This existing active scale customer required a significant capacity expansion, adding over 10 petabytes of storage. Although the expansion had to be put out to bid with multiple object storage vendors, 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. Next, A cloud service provider in South Africa transitioned from a competitive object storage solution to quantum active-scale cold storage to manage over 10 petabytes of data. The large scale of data led to an archive requirement for over half a million dollars, with Quantum Go offering a pay-as-you-go subscription model to meet their budgetary needs. Myriad continues to be on the forefront of innovation as we collaborate with a leader in the advancement of AI currently fusing quantum computing inspired algorithms and AI ML to tackle problems once deemed unsolvable. Myriad's unique architecture provides the scalability and performance they will need to support the relentless pursuit of speed to accelerate development of their next-gen AI and deep learning capabilities. The company remains committed to improving operational efficiency while focusing on accelerating growth and EBITDA expansion driven by our recently launched products that offer higher margins. This aligns with our goal of addressing customer needs for comprehensive data lifecycle management. I would like to turn it over to Ken to walk through our financial results in more detail. Ken?