Quantum Corporation

Ladies and gentlemen, greetings and welcome to the Quantum Corporation Fiscal First Quarter 2027 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 on your telephone keypad. As a reminder, this conference is being recorded for replay purposes. It is now my pleasure to introduce your host, Quantum's General Counsel, Tara Ilges. Please go ahead.

Good afternoon, and thank you for joining today's conference call to discuss Quantum's fiscal first quarter 2027 financial results. With me on today's call are Hugues Meyrath, Quantum President and Chief Executive Officer, and William White, our Chief Financial Officer. Following management's prepared remarks, we will open the call up 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, demand, backlog, supply constraints, margins, expenses, adjusted EBITDA, adjusted net income, growth, profitability, cash flows, liquidity, or other financial, operational, or performance metrics. These statements are based on our current expectations and projections and 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 about risk factors, please refer to the detailed descriptions we provide under the risk factor section in our 10-K and 10-Qs filed with the Securities and Exchange Commission. The company does not intend to update forward-looking statements once they are issued, whether as a result of new information, future events or otherwise, except were 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, Hugues Meyrath.

Thank you, Tara, and thank you to everyone for joining us today. We delivered another strong quarter as we continue executing against our strategy and helping customers address some of the biggest challenges they face around data growth, infrastructure costs, and power consumption. Revenue for the quarter was approximately $81 million, well above our guidance of $75 million. We also delivered gross margin and EBITDA performance above expectations while growing our backlog. Our results continue to be driven by strong enterprise demand across the business. At the same time, we have significant hyperscaler opportunities that remain constrained primarily by supply chain challenges. As those constraints improve, we believe there's meaningful additional opportunity ahead. Key takeaway from the quarter is simple. We're executing better, demand remains strong, and we're delivering against the commitments we've made. We're hearing a consistent message from customers. Data volumes continue to grow at unprecedented rates while budgets, power availability, and infrastructure resources remain constrained. More than ever, organizations need the right data in the right place at the right cost. They're looking for ways to optimize storage economics, improve efficiency, reduce power consumption, and scale without continually adding cost and complexity. As these challenges grow, the value of what we do grows as well, driving increased demand for solutions that enable more efficient, resilient, and cost-effective data infrastructures. Revenue in the Americas increased more than 20% sequentially, while revenue in APAC increased more than 50% sequentially, reflecting strong customer demand across both enterprise and cloud-oriented environments. Importantly, we've now delivered growth in each of the last two quarters, periods that have historically been seasonally weaker for quantum. We're seeing momentum across multiple areas of business. Service revenue increased approximately 10% quarter over quarter, reflecting stabilization after multiple years of decline. We're also seeing continued strength in tape-related royalty revenue, reflecting broader adoption of tape technologies across the industry. Recent LTO shipment data showed capacity shipments increasing 15% sequentially from the prior quarter, reinforcing what we're hearing from customers every day. Organizations are increasingly turning to tape to improve storage economics, reduce power consumption, and strengthen cyber resilience. That momentum is reflected in our pipeline with our tape opportunity funnel reaching the highest level we've seen in years. The scale of opportunities we're seeing continues to increase. This quarter, we experienced a dramatic increase in deals valued at more than a million dollars, with the majority of these exceeding $3 million. Active scale combined with TAPE continues to be a cornerstone offering in our portfolio, and its strength is clearly reflected in customer wins. During the quarter, we secured a significant renewal and expansion of an active scale deployment with the leading European biometrics institutions. Once customers implement active scale and experience its resilience, performance, and power efficiency, we typically see continued capacity extensions and footprint growth in subsequent quarters. We also secured a significant hyperscaler deployment in APAC centered around our scalar I7 tape library. This transaction was valued as well over eight figures. The I7's unmatched density and power efficiency enabled us to secure this important technical win. We believe this win highlights the growing relevance of the scalar I7 in modern tape architectures and hyperscale environments, while also validating the significant opportunity we see across the APAC region. The biggest challenge we continue to face is supply. Simply put, customers' demand remains stronger than our ability to fulfill it. During the quarter, we continued to face constraints around tape drive availability and certain disk drives. While we expect conditions to improve over the course of the year, component availability and pricing pressures remain areas of focus. Despite those challenges, our operations, supply chain, and manufacturing teams did an outstanding job enabling us to deliver results above guidance. I also want to recognize Avnet, our primary partner, for helping us support customers and navigate a difficult supply environment. As we look ahead, we like what we're seeing. Demand remains strong, our pipeline continues to grow, backlogs increasing, and the revenue has now grown sequentially for several quarters. We're winning larger and more strategic opportunities and seeing strength across all product lines and across every region. Factoring in our most recent fundraising, Quantum's now debt-free, cash flow positive, and profitable for the first time since 2023. Quantum is stronger today than it was a year ago, and we're well-positioned for continued growth and long-term value creation. With that, I'll turn the call over to Will.