Executive Summary
Quantum’s QQ3 2025 results demonstrate meaningful operating improvement and a strategic pivot toward higher-margin, recurring revenue. Revenue came in at $72.6 million, GAAP gross margin expanded to 43.8% (up 230 bps QoQ), and non-GAAP operating expenses declined about 6% YoY, delivering a positive adjusted EBITDA of $4.7 million. Annual recurring revenue (ARR) reached $21.3 million in the quarter, up 29% YoY and ~9% sequentially, with subscription-based revenue comprising over 90% of new unit sales, underscoring the company’s transition to a more predictable revenue model. Backlog normalized near $9.3 million, signaling improved revenue visibility as supply-chain constraints ease. Management attributed much of the progress to self-help actions, a higher-margin product mix, and a large U.S. federal deal, while continuing to emphasize debt reduction and balance-sheet strengthening via a standby equity purchase agreement with Yorkville Advisors.
Key Performance Indicators
QoQ: -428.08% | YoY:-243.10%
QoQ: -416.31% | YoY:-235.48%
Key Insights
Revenue: $72.6M; YoY +~1.7%, QoQ +~3% (Q3 2025). Gross Profit: $31.76M; Gross Margin 43.8% (vs 40.6% YoY, 41.5% QoQ). Operating Income: -$3.86M; Operating Margin -5.32% (YoY improvement but negative due to mix). EBITDA: -$63.43M (GAAP); Adjusted EBITDA: +$4.7M (QoQ swing to profit). Net Income: -$71.43M; Net Income Margin -98.46% (driven by a large non-cash warrant liability related charge). EPS: -$14.56; EPS Diluted: -$14.56. OpEx (Non-GAAP): $30.1M; YoY -6% (cost containment). ARR (trailing 12...
Financial Highlights
Revenue: $72.6M; YoY +~1.7%, QoQ +~3% (Q3 2025). Gross Profit: $31.76M; Gross Margin 43.8% (vs 40.6% YoY, 41.5% QoQ). Operating Income: -$3.86M; Operating Margin -5.32% (YoY improvement but negative due to mix). EBITDA: -$63.43M (GAAP); Adjusted EBITDA: +$4.7M (QoQ swing to profit). Net Income: -$71.43M; Net Income Margin -98.46% (driven by a large non-cash warrant liability related charge). EPS: -$14.56; EPS Diluted: -$14.56. OpEx (Non-GAAP): $30.1M; YoY -6% (cost containment). ARR (trailing 12 months): $141M; ARR as % of revenue: ~49%. Q3 ARR: $21.3M, +29% YoY and +9% QoQ; Subscription mix: >90% of new unit sales in the quarter. Cash & liquidity: Cash & equivalents end of period $20.6M; Net debt ~$133M; Total debt $146.4M. Free Cash Flow: -$4.25M; Operating Cash Flow: -$3.15M.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
72.55M |
1.69% |
2.95% |
| Gross Profit |
31.76M |
21.50% |
8.50% |
| Operating Income |
-3.86M |
78.22% |
44.33% |
| Net Income |
-71.43M |
-243.10% |
-428.08% |
| EPS |
-14.56 |
-235.48% |
-416.31% |
Key Financial Ratios
operatingProfitMargin
-5.32%
operatingCashFlowPerShare
$-0.64
freeCashFlowPerShare
$-0.87
Management Commentary
Management underscored the ongoing transformation toward higher-margin, recurring revenue and debt reduction. Highlights include: 1) Jamie Lerner stated that Q3 2025 results reflect self-help actions and a higher-value product mix, including a large U.S. federal deal, driving EBITDA expansion and cash-flow improvements. He added that the standby equity facility with Yorkville provides capital flexibility to accelerate growth and reduce debt. 2) Ken Gianella noted a 320 bps gross-margin expansion YoY to 43.8% and a 6% YoY reduction in non-GAAP Opex, with Adjusted EBITDA of $4.7M (vs. negative prior-year Q3). 3) The company emphasized ARR growth and subscription discipline, with ARR at $21.3M (trailing 12 months ~49% of revenue, gross margin ~67% on ARR), and that >90% of new unit sales were subscription-based. 4) Management highlighted several large wins (European retailer, U.S. government/defense agencies, Japanese research informatics institute, South African cloud service provider) and the DXi/i7 tape family as growth catalysts. 5) The company reiterated its focus on debt reduction, covenant forbearance through the next two quarters, and the Yorkville standby equity agreement to access capital over a 3-year period. 6) They acknowledged headwinds from supply-chain dynamics and tariff risk, signaling reliance on product mix optimization and larger, higher-margin deals to sustain profitability.
We finished Q3 ’25 with $72.6 million in revenue, GAAP 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.
— Jamie Lerner
Subsequent to quarter end, we announced a standby equity purchase agreement with Yorkville Advisors as a strategic financial partner.
— Jamie Lerner
Forward Guidance
Quantum reaffirmed its full-year revenue target of $280 million ± $5 million, implying Q4 revenue of about $66 million ± $2 million. Non-GAAP Opex is expected to remain flat at $30 million ± $1 million in Q4, with Q4 Adjusted EBITDA targeted around $1.7 million and full-year Adjusted EBITDA near $3 million ± $1 million. The company maintains a path toward debt reduction and potential debt-free status, aided by a standby equity facility with Yorkville Advisors. Risks to the outlook include ongoing supply-chain headwinds, potential tariff changes, and the ability to sustain the current high mix of subscription revenue. Investors should monitor: ARR growth trajectory, bookings momentum in high-margin segments (DXi, Myriad, ActiveScale), progress on debt reduction and covenant relief, and any changes to the standby equity arrangement or liquidity access. The company views Myriad, i7/DXi, and ActiveScale as primary growth engines, with StorNext contributing to services and recurring revenue earnings.