Quantum Corporation reported a challenging QQ2 2024 with a material year-over-year revenue decline and persistent profitability headwinds, despite some margin resilience. For the quarter ended June 30, 2024, revenue was $75.68 million, down 21.64% year over year and 4.96% quarter over quarter, while gross profit reached $32.74 million for a gross margin of 43.27%. Operating income was negative at $2.37 million, yet EBITDA was positive at $3.60 million, suggesting ongoing fixed-cost pressure that is not fully offset by operating leverage. Net income declined to -$3.33 million, or -$0.70 per share, reflecting higher interest costs and other charges that offset EBITDA gains.
The company exited the quarter with cash and cash equivalents of $25.75 million and total debt of $114.21 million, producing a net debt position of $88.46 million. Notably, Quantum carries negative stockholders’ equity (-$94.43 million) and a total liabilities base of $289.24 million, underscoring a balance sheet that relies on debt financing and deferred revenue to sustain operations. Free cash flow remained negative at -$2.32 million, while cash burn from operations was -$6.90 million, pointing to ongoing liquidity and working-capital considerations in a sequentially weaker demand environment.
Quantum maintains a broad archival and data-management product portfolio including CatDV (asset management and workflow orchestration), StorNext (high-performance data access and management), Scalar tape storage and DXi backup appliances, as well as surveillance analytics-oriented appliances. The presence of substantial deferred revenue (current $70.70 million and non-current $35.34 million) indicates a meaningful recurring element and long-duration contracts, which could ease near-term cash-generation volatility if recognized over time. Management commentary (where available in transcripts) would be critical to validate trajectory on backlog, pricing/mix, and success of product cycles; in the absence of formal guidance in the provided data, investors should monitor cost-control progress, mix shift toward higher-margin offerings, and any indications of demand stabilization for high-capex storage solutions.
Overall, QMCO demonstrates margin discipline in Q2 2024 but remains structurally challenged by negative net income, cash-burn dynamics, and a leverage-heavy balance sheet. The market will likely focus on the durability of the deferred-revenue base, efficiency of operating expense management, and the pace at which the company can translate its storage portfolio into sustainable, profitable growth.
Cash flow and liquidity:
- Net cash provided by operating activities: -$6.90 million
- Capital expenditures: -$1.626 million
- Free cash flow: -$2.316 million
- Cash and cash equivalents: $25.754 million
- Net debt: $88.456 million (Total debt: $114.210 million)
Balance sheet health:
- Total assets: $194.804 million
- Total liabilities: $289.237 million
- Stockholders’ equity: -$94.433 million (negative)
- Deferred revenue: current $70.696 million; non-current $35.337 million
- Working capital indicators: current ratio 0.58; quick ratio 0.38; cash ratio 0.11
- Asset mix: cash and equivalents, receivables ~$51.529 million, inventory ~$47.256 million; PP&E net $24.465 million; goodwill & intangibles $30.326 million
Operational efficiency:
- DSO ~61 days; DIO ~99 days; cash conversion cycle ~104 days
- R&D $9.152 million; SG&A $25.958 million; total operating expenses $35.111 million
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
75.68M
-21.64%
-4.96%
Gross Profit
32.74M
-16.47%
-10.86%
Operating Income
-2.37M
2.19%
-140.90%
Net Income
-3.33M
6.68%
-196.28%
EPS
-0.70
-1 772.73%
-194.29%
Key Financial Ratios
currentRatio
0.58
grossProfitMargin
43.3%
operatingProfitMargin
-3.14%
netProfitMargin
-4.4%
returnOnAssets
-1.71%
returnOnEquity
3.53%
debtEquityRatio
-1.21
operatingCashFlowPerShare
$-0.15
freeCashFlowPerShare
$-0.49
priceToBookRatio
-0.61
priceEarningsRatio
-4.35
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: Earnings transcript data is not provided in the input. As a result, no management quotes or thematic extracts can be cited. The analysis below reflects the disclosed financials and inferred implications in absence of direct transcript content.
Transcript data not provided in the input.
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Transcript data not provided in the input.
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Forward Guidance
No formal forward guidance was provided in the supplied data. Investors should monitor: (1) progression of deferred revenue recognition and whether it translates into sustained operating cash flow improvements; (2) cost-control measures targeting SG&A and R&D to bring operating margins closer to break-even; (3) demand trends for Quantum’s storage hardware and software platforms (CatDV, StorNext, Scalar) in enterprise environments and surveillance analytics; (4) balance sheet deleveraging activities or potential asset-light transitions. Given the negative equity and elevated leverage, any operational cost reductions or revenue growth catalysts could meaningfully alter risk-reward, but absent explicit targets, the outlook remains contingent on demand stabilization and disciplined capital allocation.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
QMCO Focus
43.26%
-3.14%
3.53%
-4.35%
QUBT
54.40%
-34.40%
-6.04%
-4.27%
RGTI
82.10%
-4.88%
-14.30%
-2.23%
QBTS
41.30%
-12.25%
92.80%
-2.57%
PDYN
26.20%
-23.46%
-28.90%
-43.00%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Quantum is navigating a transitional phase characterized by a revenue decline and ongoing profitability headwinds, but with some margin resilience evidenced by a gross margin of 43.3% in QQ2 2024. The presence of substantial deferred revenue could provide a cushion for near-term revenue recognition and cash flow stabilization if managed effectively. However, the negative equity position and negative operating cash flow underscore a fragile balance sheet and liquidity risk unless cost structures are meaningfully tightened and top-line stabilization occurs. Investors should adopt a cautious, data-driven stance, focusing on (1) the trajectory of operating expenses (R&D and SG&A) relative to revenue stabilization, (2) the durability and growth of the deferred revenue base, (3) progress in monetizing software subscriptions and services, and (4) any management-shared guidance on backlog conversion, mix shifts, or deleveraging plans. In a competitive landscape with mixed peer performance, QMCO could benefit from a progressive improvement in cash flow and a clearer path to profitability, but until then, the investment thesis leans toward a prudent, watchful stance with a preference for visibility on sustained margin expansion and balance-sheet repair.
Key Investment Factors
Growth Potential
Medium-term expansion could derive from improving mix toward higher-margin software subscriptions (CatDV, StorNext) and growing adoption of Scalar tape systems for long-term archival needs, particularly for regulated data and video surveillance archives.
Profitability Risk
Key risks include ongoing net losses and negative equity, cash-burn trajectory, potential liquidity constraints, cyclical hardware demand, competitive pricing pressure, and execution risk in scaling software subscriptions alongside legacy hardware revenue.
Financial Position
Liquidity is modest with $25.75m of cash. With total debt of $114.21m and negative stockholders’ equity, the company remains reliant on debt financing and deferred revenue; working-capital dynamics (low current ratio) raise near-term liquidity concerns if operating performance deteriorates.
SWOT Analysis
Strengths
Broad product portfolio addressing archival storage, asset management, and data workflows (CatDV, StorNext, Scalar, DXi) with potential recurring revenue via software subscriptions
Significant deferred revenue indicating a level of customer commitment and potential near-term revenue recognition flexibility
Specialized storage offerings for long-term retention and surveillance analytics, appealing to regulated industries and data-intensive use cases
Weaknesses
Negative stockholders’ equity and reliance on debt, signaling balance-sheet fragility
Persistent net losses and cash burn (negative operating cash flow) despite EBITDA positivity
Low liquidity ratios (current ratio ~0.58) and high leverage heighten financing and liquidity risk
Revenue decline YoY and continued sensitivity to enterprise capex cycles
Opportunities
Growth in data-intensive applications, AI/machine learning workloads, and surveillance analytics driving demand for scalable archival and data-management solutions
Conversion of deferred revenue into recognized cash flows as contracts mature and services scale
Cross-sell opportunities across CatDV, StorNext, Scalar to enterprise customers via ecosystem partnerships
Threats
Macro softness in IT capex and storage hardware spending
Intense competition in enterprise storage and data-management ecosystems
Working-capital and liquidity pressures could constrain strategic investments
Technology risk from rapid shifts to cloud storage and software-defined architectures that may reduce hardware refresh cycles