EPS of $-1.87 decreased by 167.1% from previous year
Gross margin of 35.3%
Net income of -17.21M
"In my first 90 days, we've taken critical steps. We established a new Board operating plan. We raised funds to improve our financial position, reduced operating expenses and rightsized the organization to align with current revenue and growth." - Hugues Meyrath
Quantum Corporation (QMCO) QQ1 2026 Results Analysis: liquidity strengthened, high-value portfolio pursued, and early signs of operating discipline emerging amidst ongoing transformation
Executive Summary
Quantum Corporation delivered a Q1 FY2026 topline of $64.3 million, marking a modest sequential improvement versus the prior quarter but a meaningful year-over-year decline driven by a shift in product mix and ongoing transition to higher-value solutions. Management has signaled a clear strategy to accelerate a product-first, sales-execution driven turnaround, anchored by a strengthened board and executive team, capital raising to shore up liquidity, and a sharpened focus on high-value assets such as DXi all-flash deduplicating backup appliances, ActiveScale cold storage, and StorNext with Ethernet-enabled access.
Near-term guidance for Q2 2026 contemplates a revenue trajectory around $61 million (+/- $2M) and a non-GAAP operational expense run-rate of roughly $27 million (+/- $2M), with Adjusted EBITDA around breakeven and the non-GAAP net loss per share approximately $0.26 (±$0.10). This implies that management believes the cost-reduction actions are material enough to offset a modest revenue headwind, supported by ongoing rightsizing and channel investments. The company also highlighted a liquidity enhancement via standby equity capital (~$83 million) and the termination of the revolver facility, which, if sustained, could improve balance sheet flexibility and enable continued investment in go-to-market initiatives and product innovation.
Key risks remain: (1) the pace and sustainability of the revenue ramp in higher-value segments (DXi, ActiveScale, StorNext Ethernet-based access) given lingering customer mix and macro headwinds; (2) gross margin volatility driven by end-of-life inventory provisions and tariff exposure; (3) execution risk around sales re-organization and channel strategy; (4) leverage and working-capital dynamics as the company continues its strategic pivot. Investors should monitor backlog development, the trajectory of operating expenses, progress on debt restructuring, and the timing and scale of any additional capital actions.
Key Performance Indicators
Revenue
64.29M
QoQ: -11.39% | YoY:-15.06%
Gross Profit
22.71M
35.33% margin
QoQ: -28.48% | YoY:-30.62%
Operating Income
-12.60M
QoQ: -226.32% | YoY:-430.58%
Net Income
-17.21M
QoQ: 75.91% | YoY:-416.54%
EPS
-1.87
QoQ: 87.16% | YoY:-167.14%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $64.286 million in Q1 2026 (YoY: -15.06%; QoQ: -11.39%). Net revenue reflects ongoing mix shift toward higher-value solutions and product transitions (base case disclosed in transcript and data).
Gross profit and margin: Gross profit $22.712 million; gross margin 35.33% (vs. 39.6% in Q4 2025 and 37.4% in Q1 2025). The margin decline was driven by higher inventory provisions for end-of-life products and import tariffs, partially offset by service-organization efficiency gains.
Operating expenses: GAAP operating expenses $35.3 million; non-GAAP operating expenses $30.0 million. The year-over-year decline in GAAP OpEx is attributed to nonrecurring restatement-related costs in the prior year, with ongoing run-rate savings from prior restructuring partly offset by higher compliance and legal costs. In Q2, the company expects a material OpEx reduction to ~ $27 million (±$2M).
EBITDA and operating income: EBITDA is negative $12.596 million; EBITDAR margin -0.1959; operating income negative $12.596 million. The deterioration versus prior periods is driven by lower revenue and higher tailcosts that management attributes to the ongoing restructuring and the inventory/tariff headwinds.
Net income and earnings per share: Net income -$17.206 million; EPS -$1.87 (diluted -$1.87) for the quarter. Non-GAAP net loss was -$14.5 million (EPS -$1.58).
Financial Highlights
Revenue and profitability
- Revenue: $64.286 million in Q1 2026 (YoY: -15.06%; QoQ: -11.39%). Net revenue reflects ongoing mix shift toward higher-value solutions and product transitions (base case disclosed in transcript and data).
- Gross profit and margin: Gross profit $22.712 million; gross margin 35.33% (vs. 39.6% in Q4 2025 and 37.4% in Q1 2025). The margin decline was driven by higher inventory provisions for end-of-life products and import tariffs, partially offset by service-organization efficiency gains.
- Operating expenses: GAAP operating expenses $35.3 million; non-GAAP operating expenses $30.0 million. The year-over-year decline in GAAP OpEx is attributed to nonrecurring restatement-related costs in the prior year, with ongoing run-rate savings from prior restructuring partly offset by higher compliance and legal costs. In Q2, the company expects a material OpEx reduction to ~ $27 million (±$2M).
- EBITDA and operating income: EBITDA is negative $12.596 million; EBITDAR margin -0.1959; operating income negative $12.596 million. The deterioration versus prior periods is driven by lower revenue and higher tailcosts that management attributes to the ongoing restructuring and the inventory/tariff headwinds.
- Net income and earnings per share: Net income -$17.206 million; EPS -$1.87 (diluted -$1.87) for the quarter. Non-GAAP net loss was -$14.5 million (EPS -$1.58).
- Cash flow and liquidity: Net cash from operating activities -$16.892 million; free cash flow -$18.084 million. Cash and cash equivalents at period end ~ $37.5 million. Management notes that revolver facilities were paid down and terminated, and an approx. $83 million capital raise via standby equity provided a stronger liquidity foundation.
- Backlog and working capital: Backlog at quarter end was approximately $10 million, in line with the higher end of the target run rate ($8–$10 million). Total current assets $118.443 million vs. total current liabilities $223.752 million; current ratio ~0.53, indicating tighter near-term liquidity but with improving leverage from debt actions.
- Balance-sheet complexion: Total assets ~$169.154 million; total liabilities ~$283.540 million; total stockholders’ equity negative at -$114.386 million, reflecting a capital structure that remains stressed but undergoing targeted repair through cost reductions, capital inflows, and debt-restructuring initiatives. Management highlighted a net-debt improvement, with reported net debt around the mid-$60s million range in the call, versus year-end 2025 levels, noting a >40% reduction (per management commentary).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
64.29M
-15.06%
-11.39%
Gross Profit
22.71M
-30.62%
-28.48%
Operating Income
-12.60M
-430.58%
-226.32%
Net Income
-17.21M
-416.54%
75.91%
EPS
-1.87
-167.14%
87.16%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights and quotes from the earnings call:
- Strategy and turning points
- Hugues Meyrath: "In my first 90 days, we've taken critical steps. We established a new Board operating plan. We raised funds to improve our financial position, reduced operating expenses and rightsized the organization to align with current revenue and growth." This underscores the concentrated focus on governance, cost control, and organizational realignment as a foundation for the turnaround.
- Product and go-to-market focus
- Hugues Meyrath: "This quarter, we launched 2 new DXi T-Series models that deliver the industry's first one new all-flash deduplication appliances, offering up to 480 terabytes and built for fast recovery." This highlights the emphasis on high-value DXi offerings and rapid recovery capabilities as a growth vector.
- Hugues Meyrath: "StorNext... Ethernet-based parallel client delivers aggregate read performance of up to 90 gigabytes per second... the channel partners and customers want." Signals a strategic tilt toward Ethernet-enabled StorNext to improve performance and partner alignment.
- Execution, governance, and capital position
- Hugues Meyrath: "We raised approximately $83 million in new capital from the standby equity purchase agreement through our partner, Yorkville Advisors. This has strengthened our balance sheet and liquidity to support ongoing operations." This confirms the capital-raising step tied to the liquidity plan.
- Hugues Meyrath: "We are restructuring teams to align with our growth model... building a culture of accountability. We are sharpening our discipline, metrics, and channel incentives." Signals a concrete shift in go-to-market and the accountability framework.
- Financial positioning and outlook
- Laura Nash: "Revenue for the second quarter is expected to be approximately $61 million, +/- $2 million. We expect non-GAAP OpEx of about $27 million, +/- $2 million, and Adjusted EBITDA breakeven." This provides the quantitative guardrails for near-term performance and the profitability path the company is targeting.
- Confidence and caution
- Hugues Meyrath: "While there is more work to do, I'm confident in our path and our ability to deliver long-term value for our customers, partners, employees and shareholders." Acknowledges progress with a measured, forward-looking stance.
In my first 90 days, we've taken critical steps. We established a new Board operating plan. We raised funds to improve our financial position, reduced operating expenses and rightsized the organization to align with current revenue and growth.
— Hugues Meyrath
This quarter, we launched 2 new DXi T-Series models that deliver the industry's first one new all-flash deduplication appliances, offering up to 480 terabytes and built for fast recovery.
— Hugues Meyrath
Forward Guidance
Quantum provided near-term guidance for the fiscal Q2 2026. Key elements include:
- Revenue: approximately $61 million, +/- $2 million.
- Non-GAAP operating expenses: around $27 million, +/- $2 million, reflecting ongoing cost-reduction actions and rightsizing.
- Adjusted EBITDA: expected to be roughly breakeven.
- Adjusted net loss per share: approximately -$0.26, +/- $0.10, based on ~13.3 million shares outstanding.
Management also signaled ongoing debt-restructuring discussions with lenders and the potential for additional definitive actions prior to the next earnings call. Additional drivers of performance include: (1) execution improvements in DXi, ActiveScale, and StorNext lines; (2) deeper channel partnerships and APAC distributor expansion; (3) continued capture of hyperscaler and AI data-growth opportunities in long-term archiving and data protection.
Assessment: The guideposts imply a stabilization of quarterly cash burn and a path to breakeven EBITDA in the near term if revenue mix remains favorable and cost reductions materialize as planned. However, a number of external and internal risks persist, including tariff-driven gross-margin variability, potential volatility in hyperscaler demand, and execution risk in salesorganization realignment. Investors should monitor: revenue progression by product family, gross margin trajectory (especially given end-of-life inventory provisions), progress on debt restructuring, and the success of channel reinvestments and partner incentives.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
QMCO Focus
35.33%
N/A
N/A
N/A
QUBT
33.30%
-212.46%
7.69%
15.92%
RGTI
30.00%
-14.70%
20.60%
13.23%
QBTS
92.50%
-75.30%
-2.61%
-100.39%
PDYN
79.40%
-4.05%
80.40%
2.28%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Quantum is at an inflection point. The Q1 FY2026 results show a company transitioning from legacy cost bases toward a more value-driven portfolio with AI/data-centric demand. The near-term objective is to achieve breakeven Adjusted EBITDA in Q2 through significant OpEx reductions and continued revenue mix optimization toward higher-margin DXi, ActiveScale, and StorNext offerings. Management has signaled a disciplined, top-line to bottom-line approach with concrete actions: leadership and board enhancements, tighter sales-to-product feedback loops, stronger channel incentives, and APAC distributor expansion. The liquidity infusion (~$83M) and the termination of the revolver provide breathing room to execute this plan, though the path to sustained profitability depends on (i) successful ramp of high-value product lines, (ii) stabilization of gross margins amid tariff pressures and inventory provisions, and (iii) progress on debt restructuring and additional financing if required.
Investor takeaways:
- Short-term: watch for sequential improvement in OpEx, margin stability, and progress against Q2 guide; monitor backlog trajectory and quarterly cash burn.
- Medium-term: success hinges on ramping high-value segments (DXi, ActiveScale, StorNext) and expanding partner channels, particularly in APAC and data-protection markets.
- Long-term: margin expansion and free cash flow growth depend on scale-increasing deployments, favorable mix, and disciplined capital management. Given the ongoing transformation, Quantum offers an asymmetric risk-reward profile: potential upside if the execution milestones translate into sustained profitability and cash generation; downside risk if revenue ramp stalls or external headwinds intensify.
Key Investment Factors
Growth Potential
High-value portfolio poised for growth in data-heavy markets: DXi all-flash deduplication for backup and instant recovery; ActiveScale cold storage addressing AI-driven data growth and long-term retention; StorNext Ethernet-enabled sharing for modern creative workflows. The company is actively expanding channels in APAC and forming strategic partnerships to drive cross-sell across its portfolio, which could unlock accelerated revenue growth if execution improves. Management intends to tighten feedback loops between sales and product to better align roadmaps with customer demand, a prerequisite for sustaining upside in AI, media/entertainment, and data protection markets.
Profitability Risk
Execution risk from sales-reorg and channel realignment; gross-margin volatility due to inventory provisions and tariffs; potential dependence on a few high-value customers or long sales cycles; ongoing need for capital to sustain transformation and fund working-capital; liquidity risk if revenue ramp lags or if debt-restructuring efforts encounter delays. Negative tangible equity on the balance sheet suggests continued dilution and financing risk until profitability and cash generation improve.
Financial Position
Liquidity rebuilding through standby equity (~$83M) and termination of revolver; net debt improvement cited by management (approx. -$66.8M per call) though balance-sheet data shows a complex liquidity picture. The business carries a high gross-margin opportunity in its legacy asset base, but near-term profitability remains challenged given the current quarter's margin pressure and operating losses. The balance sheet demonstrates ongoing risk and the need for disciplined capital allocation, balanced against a tangible plan for portfolio optimization and go-to-market discipline.
SWOT Analysis
Strengths
Diversified high-value product portfolio (DXi deduplicating backup, ActiveScale cold storage, Scalar tape libraries, StorNext) with a history of innovation in data storage and archiving.
Strategic focus on AI/data growth markets and long-term data retention needs, including hyperscaler requirements.
Backlog (~$10M) at the higher end of the target range, indicating potential near-term revenue visibility.
Restructuring actions, leadership additions (CRO and Americas sales leadership) and board upgrades aimed at improving go-to-market execution.
Capital-raising flexibility via standby equity facility to bolster liquidity.
Weaknesses
GAAP net loss persists and gross margin declined driven by inventory provisions and tariff costs.
Negative stockholders’ equity on the balance sheet suggesting ongoing balance-sheet stress.
Revenue softness YoY and reliance on mix-shift to higher-value products; near-term revenue headwinds remain.
Execution risk from the integration of new leadership and restructured sales teams; channel partnerships still being built out.
Opportunities
Acceleration of DXi and Ethernet-enabled StorNext adoption across enterprise and media workflows.
Expansion of APAC distribution and partnerships to capture fast-growing regional demand.
Tape/ActiveScale data-protection and long-term archiving solutions priced for mass adoption as AI-generated data expands.
Potential debt restructuring and additional equity financing to strengthen liquidity and fund growth initiatives.
Threats
Tariff exposure and macroeconomic uncertainty impacting gross margins and IT spending.
Competition from established hyperscale storage providers and emerging data-management players.
Continued execution risks as the company refines its sales model, partner ecosystem, and product portfolio.
Reliance on capital markets for liquidity could introduce valuation and timing risk if markets tighten.