Financial Data and Key Metrics Changes - Revenue for Q3 fiscal 2026 was $74.6 million, an increase from $62.7 million in the prior quarter and $68.7 million in the same quarter last year [23] - GAAP gross margin for Q3 was 38.8%, up from 37.6% in the prior quarter but down from 40.6% in the same quarter last year [25] - GAAP net loss for Q3 was $27.8 million, or a loss of $2.03 per share, compared to a net loss of $46.5 million in the previous quarter and $75.3 million in the same quarter last year [30] - Non-GAAP loss for Q3 was $4.9 million, or a loss of $0.36 per share, an improvement from a loss of $7.1 million in the prior quarter and $7.8 million in the same quarter last year [32] - Adjusted EBITDA for Q3 improved to $2.9 million from $0.5 million in the prior quarter and $0.8 million in the same quarter last year [33] Business Line Data and Key Metrics Changes - Tape sales doubled quarter-over-quarter, driven by demand for cost-effective storage solutions [15] - The services business has been in contraction, but there are indications it may flatten out as execution improves [44] Market Data and Key Metrics Changes - The company reported a strong backlog of over $20 million, significantly above the historical run rate of $8 million to $10 million [24] - Pricing for critical components has doubled or tripled recently, affecting the entire industry [10] Company Strategy and Development Direction - The company is focusing on strengthening its financial foundation through restructuring initiatives and reducing term debt by approximately 50% [7] - Quantum is positioning itself to leverage its expertise in tape storage as demand for cost-effective data solutions increases [13] - The sales model in North America has been realigned to mirror successful strategies used in EMEA, enhancing focus and execution [20] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding Q4 forecasts due to supply chain challenges, emphasizing that the uncertainty lies in fulfillment and shipping rather than demand [12][36] - The company is optimistic about long-term margins returning to the 40% range once supply chain issues stabilize [60] Other Important Information - The company has appointed a new CFO, William White, who is expected to contribute to the financial strategy and operations [22] Q&A Session Summary Question: What is behind the contraction in primary storage systems? - Management noted that the year started slowly, but there has been strength across all product lines in Q3, indicating confidence in primary storage [42] Question: Is the elevated backlog driven more by demand or component availability? - Management confirmed that demand is strong, and while there are component shortages, the backlog is growing faster than anticipated [43] Question: Can the services business potentially flatten out? - Management indicated that execution issues and discounting practices have affected services, but improvements are expected [44] Question: What should be expected for gross margins in Q4? - Management stated that the current environment makes it difficult to guide margins, but maintaining Q3 levels would be a good achievement [46][47] Question: Where is the demand for tape sales coming from? - Management highlighted that demand is strong across the board, particularly as customers migrate back from the cloud to on-premise storage solutions [52]