Quantum Corporation

Ladies and gentlemen, greetings and welcome to the Quantum Corporation third quarter fiscal 2026 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero. As a reminder, this conference is being recorded for replay purposes. It is now my pleasure to introduce your host, Quantum's Vice President, Corporate Affairs and Corporate Secretary, Tara Iglesias. Please go ahead.

Good afternoon, and thank you for joining today's conference call to discuss Quantum's third quarter fiscal 2026 financial results. With me on today's call are Hughes Mayrath, Quantum CEO, and William White, our Chief Financial Officer. Following management's prepared remarks, we will open the call to questions from analysts. Before we begin, I would like to remind you that comments made on today's call 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 flows, or other financial, operational, or performance topics. These statements involve known and unknown risks and uncertainties that 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 10-K and 10-Qs filed with the Securities and Exchange Commission. The company does not intend to update or alter forward-looking statements once they are issued, whether as a result of new information, future events, or otherwise. except where required by applicable law. Please note that today's press release and management statements during today's call will include certain financial information in GAAP and non-GAAP measures. We will include definitions and reconciliations of GAAP to non-GAAP items in our press release. With that, it's my pleasure to turn the call over to Quantum CEO, Hughes Mayrath.

Thank you, Sarah, and good afternoon, everyone. Thank you for joining us for our third quarter earnings call. As announced earlier this afternoon, revenue EBITDA exceeded the high end of our forecasted range. These results reflect our efforts to maintain disciplined execution of our strategy. Over the past two quarters, we've put a deliberate structure and focus in place to execute our operating plan. As a result, we've seen meaningful improvement in revenue, pipeline, and backlog. We also continue to strengthen our financial foundation. Through restructuring initiatives, we've lowered our cost structure in support of our near-time goal of achieving positive cash flow. During the third quarter, shareholders approved a proposal to exchange the term debt held by Dialectic for convertible notes reducing our outstanding term debt by approximately 50% to historically low levels. We continue to evaluate options for our remaining term debt as we work toward further strengthening our balance sheet. To better frame up our results, let me first address the broader market environment and the conditions impacting infrastructure decisions across the industry. As AI use cases continue to accelerate, customers are feeling the real impact from cost, power, cooling, and the volume of data that must be retained for the long term. At the same time, AI-driven demand is increasing pressure on global supply chains. Critical components, particularly memory disk and flash, are becoming increasingly difficult to procure. and prices are rising as a result. In just the last 10 days, we've seen pricing double and in some case triple. This is not unique to quantum, it's affecting the entire industry. In addition to pricing volatility, lead times are extending into weeks and sometimes even months. Similar to the early COVID period, the timing and path to stabilization remain unpredictable. Against this backdrop, it's important to highlight that we delivered a strong Q3 and we believe we're off to a strong start to Q4. We are executing on our sales plan and have now delivered two consecutive quarters of healthy backlog. Early in Q4, we secured multiple million dollars dollar purchase orders from enterprise and hyperscale customers, reinforcing the strength of demand for our solutions. That said, given the pricing dynamics and component availability, we're erring on the side of caution with our Q4 forecast. The uncertainty is not about the demand or our expectations for execution on our plan. It's about when we can fulfill and ship orders as supply chains continue to fluctuate. This is a prudent approach in an environment that is changing in real time. These conditions also reinforce where quantum is uniquely advantaged. Tape is in quantum's DNA. We are early inventors and longstanding innovators in tape. with decades of engineering leadership and deep intellectual property. Quantum scalar tape libraries are designed to be modern, high-performance systems that deliver near-line accessibility for AI workloads. It also offers the lowest cost and lowest power consumption of any storage medium available. As flash and disk become more expensive and harder to secure, We believe TAPE provides customers with a practical way to offload massive volumes of data to a cold tier, freeing up primary storage while meaningfully reducing power, cooling, and operating costs. This is especially critical as customers retain more data than ever for AI compliance and long-term reuse. We are already seeing this shift clearly in our results. Our tape sales doubled quarter over quarter as customers pivoted toward architectures designed to reduce dependence on constrained components and deliver predictable economics at scale for warm and cold data. As a recent example, in Q3, we secured a seven-figure deal with a large multinational production studio. driven by cost, power efficiency, durability, and security of Quantum's cold storage architecture. The customer selected active-scale cold storage integrated with our scalar tape libraries. This customer was able to repatriate content from the cloud to non-premise archive with predictable long-term economics while maintaining near-line access to archive data for AI-driven repurposing and reuse. The initial deployment is 100 petabytes with plans to scale to 400 petabytes over time. As the cost of flash and disk continues to rise and availability becomes more constrained, customers are increasingly looking for reliable, low-risk ways to move data off expensive primary storage without disruption. This is where Quantum StoreNex creates a unique opportunity for us. StoreNext is a leading data movement platform with thousands of customers worldwide. And like traditional data movers, StoreNext can seamlessly and reliably migrate data from virtually any storage platform across vendors and architectures directly to tape. This allows customers to offload data from high-cost primary storage to tape with confidence and reclaim valuable capacity. It also allows customers to avoid continuously provisional additional primary storage amid rising prices and component shortages. Together, StoreNext and SkillR tape enable customers to reduce their dependence on constrained components, lower costs, and extend the life of their existing primary storage infrastructure. Given StoreNext's proven reliability and broad install base, we see this as a meaningful opportunity for incremental growth as customers reassess their storage strategies in today's market environment. We also continue to execute our broader go-to-market initiatives. We strategically realigned our North America sales model to mirror the successful approach used in EMEA, where we have seen strong results improving focus, coverage, and execution. The alignment is driving tighter account prioritization stronger coordination across sales, marketing, and our channel partners, and greater consistency in how we pursue and close opportunities. At the same time, our lead generation initiatives are gaining traction, delivering higher quality opportunities into the field, and supporting pipeline growth. These efforts are resulting in larger, more strategic, multi-product opportunities as customers increasingly look for trusted partners to help them navigate cost pressure, supply constraints, and also long-term data growth. We're seeing channel partners lean in more actively, particularly around tape and StoreNext, as customers reassess their storage infrastructures. Before turning the call over to review our financial results in greater detail, I'd like to take this time to welcome our newly appointed CFO, Will White, who's joining us on today's conference call. Will brings an exceptional combination of financial discipline, operational leadership, and strategic vision to help drive Quantum's execution in this next stage of our growth. I look forward to working more closely with Will for his contributions to our future financial strategy and operations. With that, I will now turn the call over to Will.