Quantum(US:QMCO)2025-02-12 22:06Revenue Performance - Total revenue for the three months ended December 31, 2024, was $72,551 thousand, a 1% increase from $71,926 thousand in the same period of 2023[113]. - Total revenue for the nine months ended December 31, 2024, was $214.4 million, a decrease of $25.7 million or 11% compared to $240.1 million in 2023[130]. Product and Service Revenue - Product revenue increased by $1,497 thousand, or 4%, to $38,610 thousand, driven primarily by higher sales of StorNext-based solutions[114][115]. - Product revenue decreased by $22.2 million, or 16%, primarily due to a $20 million decrease in demand from large hyperscale customers[131]. - Service and subscription revenue decreased by $1,156 thousand, or 4%, to $31,615 thousand, attributed to certain long-lived products reaching their end-of-service-life[116]. - Service and subscription revenue decreased by $3.8 million, or 4%, mainly due to certain long-lived products reaching their end-of-service-life[133]. Profitability Metrics - Gross profit for the three months ended December 31, 2024, was $31,755 thousand, representing a gross margin of 43.8%, up from 40.6% in 2023[118]. - Gross profit for the nine months ended December 31, 2024, was $87.2 million, a decrease of $10.4 million compared to $97.6 million in 2023, with a gross margin of 40.7%[135]. - Product gross margin decreased by 420 basis points to 19.9%, attributed to a less favorable revenue mix[136]. Expenses and Losses - Operating expenses totaled $35,615 thousand, remaining consistent at 49% of revenue compared to the same period in 2023[122]. - General and administrative expenses rose by $2,249 thousand, or 19%, primarily due to higher compliance-related costs[123]. - General and administrative expenses increased by $14.4 million, or 41%, primarily due to non-recurring costs related to financial statement restatements[141]. - Interest expense increased by $2,903 thousand, or 74%, to $6,840 thousand due to a higher effective interest rate on the Term Loan[127]. - Interest expense increased by $5.8 million, or 52%, due to a higher effective interest rate on the Term Loan[145]. - Restructuring charges increased by $845 thousand, or 170%, reflecting cost reduction initiatives undertaken in the current year[125]. - Net loss for the three months ended December 31, 2024, was $71,433 thousand, compared to a net loss of $9,869 thousand in the same period of 2023[113]. Cash Flow and Debt - Cash and cash equivalents as of December 31, 2024, were $20.4 million, with total outstanding Term Loan debt of $105.9 million[151]. - Net cash used in operating activities was $20.3 million for the nine months ended December 31, 2024, primarily due to lower earnings[155]. - The company expects to be in violation of its net leverage covenant as of June 30, 2025, which may trigger defaults on outstanding debt[152]. Contingent Liabilities and Commitments - The company has contingent liabilities primarily related to product liability and potential intellectual property infringement, with little historical cost impact on operating results[159]. - There are no off-balance sheet arrangements or holdings in variable interest entities, aside from indemnification commitments[161]. - Contractual obligations and commercial commitments remain unchanged from the Annual Report, with no material changes noted[162]. Accounting and Risk Disclosures - Critical accounting estimates require significant management judgment, which could materially impact financial statements if actual performance differs from historical experience[163]. - There have been no material changes to quantitative and qualitative disclosures about market risk from the previous Form 10-K[166].