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1. Company Snapshot

1.a. Company Description

Quantum Corporation provides products for storing and managing digital video and unstructured data in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.The company offers CatDV, an asset management and workflow orchestration platform that provides asset management, automation, and collaboration tools for organization that manages large volumes of digital media; StorNext software systems that enable high-speed ingest, editing, processing, and management of digital video and image datasets; and Scalar tape systems that provide long-term data storage facility to archive and preserve digital content for decades.It also provides DXi backup appliances for backup storage and multi-site disaster recovery; portfolio of products designed for the capture and analysis of video surveillance and security, including video recording servers, as well as hyperconverged storage systems for video surveillance management and recording; and appliances designed for video surveillance analytics and to run various types of access control systems.


In addition, the company offers managed services, customer support agreements, software subscriptions, installation, and consulting and training services; and object storage systems for online content repositories, such as media archives, genome sequencing data repositories, and big data lakes.Further, it sells linear tape-open (LTO) tape cartridges, as well as standalone LTO tape drives for small business and desktop use.The company sells its products through a network of distributors, value-added resellers, direct marketing resellers, original equipment manufacturers, and other suppliers, as well as directly to corporate entities and government agencies.


Quantum Corporation was founded in 1980 and is headquartered in San Jose, California.

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1.b. Last Insights on QMCO

Negative drivers behind Quantum Corporation's recent performance include a Q3 loss wider than expected, despite revenues beating expectations. The company's high debt burden and supply chain issues raise concerns, while a slowdown in the Product segment and stiff competition limit its growth potential. Additionally, the company's focus on driving growth through innovative products and operational efficiency is overshadowed by its high debt and debt-related issues. Furthermore, the recent class action lawsuits filed against the company and its officers due to alleged violations of federal securities laws add to the negative sentiment.

1.c. Company Highlights

2. Quantum Corporation's Q2 FY2026 Earnings: A Mixed Bag

Quantum Corporation reported revenue of $62.7 million for the second quarter of fiscal 2026, at the high end of its guidance. The company's non-GAAP operating expense was $24.8 million, down $5.2 million from the prior quarter, and it achieved positive adjusted EBITDA of $0.5 million, above expectations. However, the actual EPS came out at -$0.54, relative to estimates at -$0.25, indicating a wider loss than expected.

Publication Date: Nov -29

📋 Highlights
  • Revenue & Margin Performance: Q2 revenue reached $62.7M (high-end guidance), with non-GAAP operating expenses down $5.2M QoQ to $24.8M and positive adjusted EBITDA of $0.5M, exceeding expectations.
  • Debt Restructuring: $52M term debt conversion to senior secured convertible notes, reducing total debt by $140M since 2020 and eliminating leverage/liquidity constraints.
  • Backlog Growth: Closed Q2 with $25M product backlog (vs. $8-10M target), driven by Library of Congress 100-year archive deal and 28% YoY product bookings growth.
  • Product Momentum: Launched ActiveScale Cold Storage enhancements and partnered with Entanglement for AI/HPC storage fabric, alongside 28% YoY product bookings growth.
  • Guidance Caution: Q3 revenue guidance at $65M implies YoY product revenue decline due to manufacturing constraints (tape libraries) and distributor transition (Avnet) challenges.

Operational Highlights

The company closed the quarter with a record backlog of over $25 million, significantly above the historical target range of $8-10 million. This is a positive sign, and the company's CEO, Hugues Meyrath, attributed this success to the new sales team's execution, particularly in the last part of the quarter. Meyrath noted that the backlog is primarily composed of product, with a mix of customers, geographies, and product types.

Guidance and Challenges

For the third quarter, Quantum guides for revenue of approximately $67 million, with non-GAAP operating expenses of $25 million and a non-GAAP adjusted net loss per share of -$0.51. While the company expects positive adjusted EBITDA of $1 million, it faces challenges, including manufacturing limitations, particularly with tape libraries, and the transition to a new distributor, Avnet. These factors may impact the company's ability to monetize bookings in the current quarter.

Product Gross Margin and Strategic Focus

Product gross margin remains a challenge, down 500-plus basis points year-over-year, mainly due to supply chain constraints, including tightness in certain platforms and rising prices. The company plans to address this by reducing the number of SKUs and platforms, and optimizing its supply chain. Quantum will focus on core StorNext customers and scaling sales for its DXi product line.

Valuation and Outlook

With a P/S Ratio of 0.18 and an EV/EBITDA of -0.25, the market seems to have low expectations from the company. Analysts estimate next year's revenue growth at -8.8%. The company's debt reduction efforts, including the conversion of $52 million in term debt to senior secured convertible notes, are a positive step. However, the actual EPS was worse than expected, and the company's guidance is cautious due to potential variability in the business.

3. NewsRoom

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Time to Buy Quantum Stocks? (QBTS, IONQ, RGTI)

Dec -04

Source: zacks.com

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WiMi Studies Hybrid Quantum-Classical Learning Architecture for Multi-Class Image Classification

Dec -04

Source: prnewswire.com

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MicroCloud Hologram Inc. Develops Quantum-Driven 3D Intelligent Model

Dec -04

Source: prnewswire.com

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2 Stocks to Play a Quantum Computing Inflection Point

Dec -04

Source: 247wallst.com

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Scope Technologies Corp Completes Name Change and Corporate Rebrand to QSE - Quantum Secure Encryption Corp.

Dec -04

Source: newsfilecorp.com

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VIAVI and QNu Labs Partner to Accelerate Quantum-Safe Network Security

Dec -04

Source: prnewswire.com

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Looking for a Better Quantum Computing Stock Than IonQ? Wall Street Loves This One.

Dec -04

Source: fool.com

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Planet Labs Prepares For Q3'26 Earnings Amid Strategic Quantum Systems Collaboration

Dec -04

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.89%)

6. Segments

Secondary Storage Systems

Expected Growth: 10.27%

Quantum Corporation's Secondary Storage Systems growth is driven by increasing demand for data storage and management solutions, fueled by rapid data growth, digital transformation, and the need for cost-effective and scalable storage infrastructure. Additionally, the adoption of cloud, artificial intelligence, and IoT technologies is contributing to the segment's growth.

Service

Expected Growth: 12.47%

Quantum Corporation's 12.47% growth is driven by increasing demand for data storage and management solutions, fueled by the rapid adoption of cloud computing, big data, and IoT. Additionally, the company's strategic acquisitions and partnerships have expanded its product portfolio and enhanced its competitive position.

Primary Storage Systems

Expected Growth: 10.27%

Quantum Corporation's Primary Storage Systems growth is driven by increasing demand for data storage and management in industries such as media, entertainment, and surveillance. The rise of 4K and 8K video, IoT devices, and AI applications also fuels growth. Additionally, the need for data protection, security, and compliance with regulations like GDPR and HIPAA contributes to the 10.27% growth.

Device and Media

Expected Growth: 9.98%

Quantum Corporation's Device and Media segment growth of 9.98% is driven by increasing demand for data storage and management solutions, particularly in the video surveillance and data center markets. Additionally, the company's strategic partnerships and investments in emerging technologies such as artificial intelligence and cloud storage are contributing to its growth momentum.

Royalty

Expected Growth: 9.98%

The 9.98% growth in royalty from Quantum Corporation is driven by increasing demand for high-capacity hard disk drives, strategic partnerships with leading technology companies, and expansion into emerging markets. Additionally, the company's focus on research and development has led to the introduction of new products and technologies, further boosting revenue growth.

7. Detailed Products

DXi-Series Appliances

A family of disk-based backup and deduplication appliances that provide high-performance data protection and disaster recovery

Scalar Tape Libraries

A range of tape libraries that provide scalable, high-capacity data storage and archiving solutions

StorNext File System

A high-performance, shared storage file system that enables fast data access and collaboration

Xcellis Scale-out NAS

A scalable, high-performance network-attached storage (NAS) solution for large-scale data storage and management

ActiveScale Object Storage

A highly scalable, durable, and secure object storage solution for large-scale data storage and archiving

Quantum Cloud Services

A range of cloud-based data protection and management services that provide scalable, on-demand data storage and management

8. Quantum Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Quantum Corporation faces moderate threat from substitutes due to the availability of alternative storage solutions.

Bargaining Power Of Customers

Quantum Corporation's customers have significant bargaining power due to the presence of multiple vendors in the data storage market.

Bargaining Power Of Suppliers

Quantum Corporation has a diverse supplier base, reducing the bargaining power of individual suppliers.

Threat Of New Entrants

The data storage market has significant barriers to entry, making it difficult for new entrants to compete with established players like Quantum Corporation.

Intensity Of Rivalry

The data storage market is highly competitive, with multiple players competing for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 781.53%
Debt Cost 10.06%
Equity Weight -681.53%
Equity Cost 16.72%
WACC -35.34%
Leverage -114.67%

11. Quality Control: Quantum Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Quantum

A-Score: 4.4/10

Value: 10.0

Growth: 1.0

Quality: 5.8

Yield: 0.0

Momentum: 9.5

Volatility: 0.3

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Stock-Card
Identiv

A-Score: 4.4/10

Value: 8.4

Growth: 3.6

Quality: 6.3

Yield: 0.0

Momentum: 4.5

Volatility: 3.7

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Stock-Card
Stratasys

A-Score: 4.3/10

Value: 8.6

Growth: 2.3

Quality: 3.5

Yield: 0.0

Momentum: 8.5

Volatility: 3.0

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Corsair Gaming

A-Score: 4.0/10

Value: 6.5

Growth: 2.7

Quality: 4.5

Yield: 0.0

Momentum: 7.5

Volatility: 3.0

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Stock-Card
Fathom Digital

A-Score: 3.9/10

Value: 8.1

Growth: 4.9

Quality: 4.8

Yield: 0.0

Momentum: 5.0

Volatility: 0.7

1-Year Total Return ->

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Stock-Card
Red Cat Holdings

A-Score: 3.7/10

Value: 6.0

Growth: 2.8

Quality: 3.3

Yield: 0.0

Momentum: 10.0

Volatility: 0.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

-650.02$

Current Price

8.72$

Potential

-7554.36%

Expected Cash-Flows