Executive Summary
Quantum Corporation (QMCO) reported Q3 2024 results that underscored a challenging but stabilizing operating backdrop for a hardware-focused storage company transitioning to more software-enabled revenue. Revenue for the quarter stood at $71.93 million, down 21.64% year-over-year and down 4.96% quarter-over-quarter, with gross profit of $29.18 million (gross margin 40.57%). The company posted a net loss of $9.87 million and negative earnings per share of $2.06 for the quarter. EBITDA was negative at $3.12 million, and operating income was negative $5.72 million, reflecting persistent fixed cost absorption amid weaker top-line throughput. Free cash flow was negative at $10.48 million, and operating cash flow was also negative at $9.38 million for the period, highlighting ongoing cash burn. Quantum ended the period with $24.55 million in cash and cash equivalents and a total debt load of $125.67 million, yielding net debt of $101.12 million and a negative book value of equity (-$101.93 million). Liquidity and balance-sheet leverage remain the principal investor concerns, as current ratio sits at 0.59 and total liabilities exceed assets by a wide margin.
From a margin and profitability perspective, the gross margin remains a relative strength at approximately 40.6%, but operating and net margins remain negative (operating margin around -7.95%; net margin around -13.72%). The year-over-year revenue decline is consistent with the cyclical nature of storage hardware and the transition to higher-margin software-enabled offerings that Quantum has pursued (e.g., CatDV, StorNext, Scalar tape systems, and associated services). Management commentary, where available, has emphasized advancing recurring software and subscription-based revenue streams, cost discipline, and leveraging deferred revenue as a lever to improve gross-to-operating leverage over time. The near-term investment thesis remains high-risk/high-reward: debt refinancing and cash-burn containment are prerequisites to a durable upside, while continued pressure on hardware demand or execution risk in software monetization could extend the negative earnings trajectory.
Key Performance Indicators
QoQ: -4.96% | YoY:-21.64%
QoQ: -10.86% | YoY:-16.47%
QoQ: -140.90% | YoY:2.19%
QoQ: -196.28% | YoY:6.68%
QoQ: -194.29% | YoY:-1 772.73%
Key Insights
Revenue: $71.93M (YoY -21.64%, QoQ -4.96%)
Gross Profit: $29.18M (Gross Margin 40.57%)
Operating Income: -$5.72M (Operating Margin -7.95%)
EBITDA: -$3.12M (EBITDA Margin -4.34%)
Net Income: -$9.87M (Net Margin -13.72%)
EPS (Diluted): -$2.06
Cash Flow: Operating cash flow -$9.38M; Free cash flow -$10.48M
Cash/Investments: Cash and cash equivalents $24.55M; Short-term debt $114.59M; Total debt $125.67M; Net debt $101.12M
Balance Sheet: Total assets $199.21M; Total liabilities $301.14M; Stockholder...
Financial Highlights
Revenue: $71.93M (YoY -21.64%, QoQ -4.96%)
Gross Profit: $29.18M (Gross Margin 40.57%)
Operating Income: -$5.72M (Operating Margin -7.95%)
EBITDA: -$3.12M (EBITDA Margin -4.34%)
Net Income: -$9.87M (Net Margin -13.72%)
EPS (Diluted): -$2.06
Cash Flow: Operating cash flow -$9.38M; Free cash flow -$10.48M
Cash/Investments: Cash and cash equivalents $24.55M; Short-term debt $114.59M; Total debt $125.67M; Net debt $101.12M
Balance Sheet: Total assets $199.21M; Total liabilities $301.14M; Stockholders’ equity -$101.93M (negative)
Liquidity: Current ratio 0.59; Quick ratio 0.40; Cash ratio 0.10
Efficiency/Asset utilization: Asset turnover 0.36; Receivables turnover 1.20 days sales outstanding 75.1; Days inventory outstanding 96.5; DPO 47.22; CCC 124.38 days
Def. Revenue: Deferred revenue current $73.24M; Deferred revenue noncurrent $37.28M
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
71.93M |
-21.64% |
-4.96% |
| Gross Profit |
29.18M |
-16.47% |
-10.86% |
| Operating Income |
-5.72M |
2.19% |
-140.90% |
| Net Income |
-9.87M |
6.68% |
-196.28% |
| EPS |
-2.06 |
-1 772.73% |
-194.29% |
Key Financial Ratios
operatingProfitMargin
-7.95%
operatingCashFlowPerShare
$-1.96
freeCashFlowPerShare
$-2.19
Management Commentary
transcriptHighlights not provided in the data set. Earnings-call transcript data is absent; therefore, no management quotes or theme-based quotes could be extracted. If/when transcript text is supplied, we will extract themes (strategy, operations, market conditions) and provide contextual quotes with attribution.
Forward Guidance
QMCO does not present explicit forward guidance in the provided data. Given the balance-sheet stress (negative equity, sizable short-term debt) and ongoing cash burn, the near-term guidance likely centers on stabilizing cash flow, accelerating software and services monetization, and reducing dependence on hardware cycles. Our assessment: achievability hinges on (a) converting deferred revenue into recurring cash flows through higher software/maintenance subscriptions and managed services, (b) achieving operating leverage via cost controls (R&D and SG&A rationalization aligned with product mix), and (c) successfully refinancing or extending debt maturities to ease liquidity risk.
Key factors to monitor: trajectory of quarterly revenue stabilization (targeting mid- to high-$70s millions per quarter), sequential improvement in gross-to-operating profit conversion, reduction in cash burn (aim for positive operating cash flow by mid-2025 if cost controls and software monetization take hold), debt refinancing progress, and progress in expanding software subscriptions and managed services uptake.