Quantum Corporation (QMCO) reported its Q3 FY2025 earnings, revealing a slight revenue increase and a significant improvement in adjusted EBITDA. Despite these positive financial metrics, the company’s stock saw a notable decline in aftermarket trading. According to InvestingPro data, the company has a market capitalization of $111.47 million and operates with significant financial challenges, as indicated by its Weak Financial Health Score of 1.28 out of 5.
Key Takeaways
- Q3 FY2025 revenue reached $72.6 million, marking a 1% increase year-over-year.
- Adjusted EBITDA improved significantly to $4.7 million from a loss of $2.6 million the previous year.
- The stock price dropped by 13.09% in aftermarket trading, despite a 30.43% increase during regular trading hours.
- Quantum’s strategic focus remains on becoming cash flow positive and debt-free by fiscal year 2026.
Company Performance
Quantum Corporation demonstrated resilience in Q3 FY2025 with a slight revenue increase and a remarkable turnaround in adjusted EBITDA. The company’s focus on innovation and cost containment strategies has contributed to its improved financial health. Quantum’s advancements in data protection and storage solutions have positioned it well in a competitive market, although geopolitical and supply chain uncertainties remain challenges.
Financial Highlights
- Revenue: $72.6 million, up 1% year-over-year
- GAAP Gross Margin: 43.8%, an increase of 230 basis points quarter-over-quarter
- Adjusted EBITDA: $4.7 million, compared to a loss of $2.6 million in the previous year
- Non-GAAP Operating Expenses: $30.1 million, down 6% year-over-year
- Annual Recurring Revenue (ARR): $141 million, 49% of total revenue
- Subscription ARR: $21.3 million, a 29% increase year-over-year
Market Reaction
Despite Quantum’s positive financial performance, its stock experienced a 13.09% decline in aftermarket trading, falling to $20.19. This drop followed a substantial 30.43% increase during regular trading hours. InvestingPro analysis shows the stock has been highly volatile, with a beta of 3.01 and a remarkable 270% price return over the past six months. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its fundamental value. The stock’s volatility reflects investor concerns over future earnings projections and broader market uncertainties, despite the company’s strategic initiatives.
Outlook & Guidance
Quantum has provided a full-year revenue guidance of $280 million, with a margin of $5 million. The company aims to achieve a full-year adjusted EBITDA of $3 million, plus or minus $1 million. Looking ahead, Quantum plans to focus on becoming cash flow positive and debt-free, with growth targeted for fiscal year 2026.
Executive Commentary
CEO Jamie Lerner emphasized the company’s commitment to growth, stating, "This is the year where we’re committing and we’re pretty confident that the company because of these investments moves into a growth mode." He also highlighted the importance of achieving positive cash flow, saying, "We need to get cash flow positive this year. We need to return to growth this year."
Risks and Challenges
- Geopolitical and supply chain uncertainties could impact Quantum’s operations and cost structure.
- The competitive landscape in data protection and storage markets may pressure pricing and margins.
- Achieving cash flow positivity and reducing debt levels will require sustained financial discipline and market growth.
Q&A
During the earnings call, analysts inquired about the mechanics of the Standby Equity Purchase Agreement and potential tariff challenges. Quantum’s management detailed the performance of their products across different market segments and emphasized their technological differentiation in backup and storage solutions.
Full transcript - Quantum Corp (NASDAQ:QMCO) Q3 2025:
Conference Operator: Greetings, and welcome to the Quantum Corporation Fiscal Third Quarter twenty twenty five Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to your host, Chief Administrative Officer, Brian Cabrera.
Please go ahead.
Jamie Lerner, Chairman and CEO, Quantum Corporation: Good afternoon and thank you for joining today’s conference call to discuss Quantum’s third quarter fiscal twenty twenty five financial results. I’m Brian Cabrera, Quantum’s Chief Administrative Officer. Speaking first today is Jamie Lerner, our Chairman and CEO followed by Ken Gianella, our CFO. We’ll then open the call to questions from analysts. Some of our comments during the call today may include forward looking statements.
All statements, other than statements of historical fact, should be viewed as forward looking, including any projections of revenue, margins, expenses, adjusted EBITDA, adjusted net income, cash flow or other financial, operational or performance topics. These statements involve known and unknown risks and uncertainties we refer to as risk factors. Risk factors may cause our actual results to differ materially from our forecast. For more information, please refer to the detailed descriptions we provide about these and additional risk factors under the Risk Factors section in our 10 Qs and 10 K filed with the Securities and Exchange Commission. We do not intend to update or alter our forward looking statements once they are issued, whether as a result of new information, future events or otherwise, except of course as we are required by applicable law.
Please note that our press release and the management statements we make during today’s call will include certain financial information in GAAP and non GAAP measures. We include definitions and reconciliations of GAAP to non GAAP items in our press release. Now, I’d like to turn the call over to our Chairman and CEO, Jamie Lerner. Jamie? Thank you, Brian, and thank you all for joining us.
Earlier today, we announced our results for our third quarter fiscal twenty twenty five. Turning to Slide four, here are some brief highlights from the quarter. We finished Q3 twenty twenty five with $72,600,000 in revenue, GAAP gross margin of 43.8%, up two thirty basis points quarter over quarter and adjusted EBITDA of positive 4,700,000 an increase of $5,000,000 quarter over quarter. Third quarter revenue increased sequentially and was above the midpoint of guidance as recent bookings momentum and customer wins were converted into realized sales. The company made continued progress in shifting to a subscription based model.
Our subscription ARR increased 29% year over year to 23 sorry, $21,300,000 with over 90% of new sales in the quarter on subscription. Additionally, we achieved a positive adjusted EBITDA of $4,700,000 surpassing expectations and generating improved free cash flow. These results were driven by a 6% year over year reduction in non GAAP operating expenses and a two thirty basis point sequential expansion in gross margin to nearly 44%. This reflects the success of the company’s self help actions in tandem with a higher value product mix and a large U. S.
Federal deal. As part of our broader transformation, a key focus has been significantly reducing outstanding debt to achieve financial independence and eliminate costly interest and fees. To support this, the company entered into a standby equity purchase agreement with a new financial partner, ensuring access to additional capital and liquidity on favorable terms. This strategic move will strengthen the balance sheet, lower the cost structure through a staged debt reduction and provide greater flexibility to accelerate growth initiatives. The company is progressing with its transformation plan aimed at driving sustainable revenue growth and EBITDA expansion.
I would like to share notable highlights from the quarter. Secondary storage revenue grew 15% year over year, largely driven by the success of the new DXI data protection appliances, which were significantly designed with cybersecurity features. Long time customers who have depended on Quantum’s backup and recovery solutions for years are now upgrading their systems to leverage the efficiencies of the newly launched DXi appliances. A key highlight was winning at March multimillion dollar deal with a top European retailer. We are also winning new business by offering highly competitive solutions in the market.
For example, a major American multinational technology manufacturer chose Quantum for their global backup and recovery strategy. They deployed a pair of DXI9200s with plans for a scalar tape library for secure archiving and multiple DXI T Series appliances for remote locations replicating to The U. S. Site for disaster recovery. Quantum was selected over a point product vendor due to its ability to provide tiered backup and archive solutions, robust security features and strong international support capability.
Alongside our traditional backup and recovery solutions, our archive solutions continue to grow at substantial deal sizes based on petabyte scale data needs. We secured a 7 figure deal with the Japanese Research Informatics Institute. This existing active scale customer required a significant capacity expansion adding over 10 petabytes of storage. Although the expansion had to be put out to bid with multiple object storage vendors, the institute chose to stay with Quantum due to prior satisfaction and our technology advantage with dynamic data placement to optimize throughput and protect against data loss. Next (LON:NXT), a cloud service provider in South Africa transitioned from a competitive object storage solution to quantum active scale cold storage to manage over 10 petabytes of data.
The large scale of data led to an archive requirement for over $500,000 with Quantum Go offering a pay as you go subscription model to meet their budgetary needs. Myriad continues to be on the forefront of innovation as we collaborate with the leader in the advancement of AI, currently fusing quantum computing inspired algorithms and AIML to tackle problems once deemed unsolvable. Myriad’s unique architecture provides the scalability and performance they will need to support the relentless pursuit of speed to accelerate development of their next gen AI and to deep learning capabilities. The company remains committed to improving operational efficiency, while focusing on accelerating growth and EBITDA expansion driven by our recently launched products that offer higher markets. This aligns with our goal of addressing customer needs for comprehensive data lifecycle management.
Now, I would like to turn it over to Ken to walk through our financial results in more detail. Ken? Thank you, Jamie. Please turn to Slide seven and I’ll provide an overview of the GAAP financial results for our fiscal third quarter. Revenue was $72,600,000 an increase of approximately 1% year over year and up approximately 3% from the prior quarter.
Bookings for the quarter were slightly better than our expectations as we continue to convert recent customer wins into realized sales. Backlog also began to normalize and finished the quarter at approximately $9,300,000 which is at our target run rate of $8,000,000 to $10,000,000 even though supply chain lead times still remain extended in certain areas. Our GAAP gross margin for the period expanded three twenty basis points to 43.8% from 40.6% in the year ago quarter and two thirty basis points from 41.5% in the prior quarter. The increase in gross margins reflects our ongoing efforts to drive improved product mix towards our higher margin, higher value solutions combined with stronger royalty revenue in the quarter. GAAP net loss for the third quarter was $71,400,000 which included a non cash charge of a negative $61,600,000 related to the fair market value of warrant liabilities resulting from the significant increase in our stock price during the quarter, as well as a positive non cash impact of $1,200,000 intercompany foreign currency adjustment.
This compares GAAP net loss of $9,900,000 or a loss of $2.08 per share in the prior fiscal quarter. Now turning to Slide eight for non GAAP metrics. Non GAAP operating expenses were $30,100,000 in the third quarter, an approximate 6% reduction from the $32,000,000 last year and down approximately 1% from the prior quarter. This continued reduction in operating expenses is the result of our proactive self help actions to improve process and productivity and we expect to maintain operating costs at or below these levels in the fourth quarter as ongoing cost containment actions take hold. Adjusted EBITDA in the third quarter was a positive $4,700,000 compared with the negative $2,600,000 in the prior year third quarter and a negative $300,000 in the prior quarter.
This represents a $7,300,000 improvement year over year and a $5,000,000 improvement sequentially, reflects the benefits of higher quality of revenue mix combined with our ongoing operational improvements. As mentioned last quarter and it’s worth reiterating again, our total savings from our operational initiatives have resulted in almost $40,000,000 of savings since the end of FY 2023. In addition to our focus on improving EBITDA and total profitability, we also continue to prioritize annual recurring revenue, which we expect to be a key driver for delivering increasing profitability over time. Moving to Slide nine, I want to briefly highlight our annual recurring revenue and subscription metrics and the progress we are making towards driving higher quality revenue. Total (EPA:TTEF) annual recurring revenue or ARR for the trailing twelve months was approximately 49% of our total revenue at $141,000,000 with a gross margin on the combined business being approximately 67%.
As a company, we continue to focus on our total subscription TCV and subscription ARR by maximizing our quantum subscription opportunities to both our partners and customers globally. This quarter, we have another positive indicator that demonstrates our progress on subscription ARR with the third quarter increasing approximately 29% year over year and approximately 9% sequentially to $21,300,000 with over 90% of new unit sales in the quarter being subscription based. Continuing this rotation and focus on total recurring revenue is a key element of our long term business model and driving increased profitability and cash flow. Now, please turn to Slide 10 for an overview of the debt and liquidity at the end of the quarter. Cash, cash equivalents and restricted cash at the end of the third quarter were approximately $20,600,000 Outstanding debt split between term and our revolver was $105,900,000 and $37,500,000 respectively.
As of the quarter end, the company’s net debt position was $133,000,000 Turning to Slide 11. As Jamie previously mentioned, one of our highest strategic priorities has been to improve the company’s overall cost structure, including significant reduction in our outstanding debt. Quantum has made substantial efforts over the last year to improve our operational and financial health through a combination of revenue and margin improvement plans, financial and organizational restructuring and cost reduction initiatives. We have been exploring several alternatives to pay down our current outstanding debt, which will also help to lower our cost structure, including lowering the interest expense and other fees the company has incurred. These actions combined with improving our operating free cash flow strengthen Quantum for its future success.
Subsequent to quarter end, we announced the Standby Equity Purchase Agreement with York Phil Advisors as a strategic financial partner. This agreement gives Quantum the right to access additional capital at the company’s discretion over a three year period. As part of the agreement, the initial tranche is limited to 1,150,000.00 shares or 19.99% of outstanding shares with the remainder requiring shareholder approval. In support of Quantum’s effort to strengthen our balance sheet, the company’s existing lenders have provided covenant forbearance for both fiscal Q3 twenty twenty five and fiscal Q4 twenty twenty five as we work towards shareholder approval. Turning to Slide 12, let me close out the company’s guidance for the fiscal fourth quarter in an updated view of fiscal twenty twenty five overall.
First, we are reiterating our previously full year financial revenue guidance of $280,000,000 plus or minus $5,000,000 which contemplates fourth quarter total revenue of approximately $66,000,000 plus or minus $2,000,000 The fiscal fourth quarter primarily reflects the normal calendar first quarter seasonality potential impact from supply chain headwinds that may occur. We expect to hold fourth quarter non GAAP operating expenses effectively flat at $30,000,000 plus or minus $1,000,000 reflecting a significant cost reduction actions we have taken over the last two years. As a result, non GAAP adjusted net loss per share for the fourth quarter is expected to be a negative $1.16 plus or minus $0.05 per share based on an estimated 5,800,000.0 shares outstanding. Our outlook for the full year adjusted EBITDA continues to be $3,000,000 plus or minus $1,000,000 which contemplates fourth quarter adjusted EBITDA of approximately $1,700,000 The midpoint of our EBITDA guidance represents a significant year over year improvement of approximately $8,000,000 both on a quarterly and on a full year basis. With that, I’ll now hand the call back to Jamie for closing remarks.
Thank you, Ken. In closing, this quarter, Quantum has clearly demonstrated the benefits of our self help initiatives. This includes driving a higher quality of revenue and profitable growth, executing on improving our operational process and productivity, combined with significant steps toward being cash flow positive and moving the company forward to become debt free. While we continue our financial transformation, we remain focused on driving new and innovative products into the marketplace, improving our customers’ experience and leveraging our global footprint to improve our overall service model. With the recently secured agreement and access to additional capital, we believe we are increasingly well positioned to fully execute our business strategy and realize growth in revenue and profitability over the coming year.
I’ll now hand the call back to the operator for questions. Operator?
Conference Operator: Thank you. And I’ll be conducting a question and answer session. Our first question is coming from Eric Martinuzzi from Lake Street. Your line is now live.
Eric Martinuzzi, Analyst, Lake Street: Yes. Congrats on the year over year improvement. It’s good to see the revenue back in a positive comp and certainly the sequential EBITDA improvement is notable. I wanted to talk first off about the CEPA, the purchase arrangement that you’ve got with Yorkville. Just curious to know how will this actually work?
I saw it was declared effective yesterday, but will you be taking action prior to shareholder approval? When do you expect shareholder approval? Just some high level comments would be welcome.
Jamie Lerner, Chairman and CEO, Quantum Corporation: Yes. I’ll start and let Ken get into the mechanics of it. We haven’t announced anything yet in terms of whether or whether or not we’re going to sell against this eloc. But I think it’s a really good tool for the company to raise capital under very efficient terms. And we’ve announced what our strategy is for this year.
And there’s several things we want to achieve. One, we want to get the company to be debt free. Secondly, we want to stop burning cash and make cash and we’re getting very close to that. We think this year will cross over to where we’re no longer a cash consumer, but a cash producer. And finally, we think this is the year where we’ve stemmed some of the declines in our business and we go back into growth mode.
And this is just a tool at our disposal to give us some of that growth capital as well as pay down debt that will allow us to meet those objectives. But nothing has been announced of when or how we’re going to use it. That will be forthcoming and not the Board decision. Ken, I don’t know if you have any comments about the instrument. No, I think you covered it, Jamie.
We work with our Board and our financial advisors and make sure it’s right. As Jamie said, it is a great tool that we now have with us to operate the company and help manage our liquidity and working capital and pay down debt as we go. So we’ll let you guys know more as we go.
Eric Martinuzzi, Analyst, Lake Street: Okay. And then just curious to know, you talked about the temporary manufacturing headwinds as part of the reason for the guidance that you gave. Is this continuation of the prior quarter issues that you described? Or is there any tariff impact to the guidance here?
Jamie Lerner, Chairman and CEO, Quantum Corporation: Yes. I mean, it’s a number of factors. One is we are beginning to manufacture the new i7 product and we’ve got a fair amount of demand for it. And some of the parts are just long lead time and really figure out what the right demand signal is. I mean, we’ve never really sold it and made it before.
So it’s all, I would say, estimates. So we’re going through that. Secondly, I mean, we have had the concerns of what happens if tariffs are turned on, what happens if tariffs are turned off. So that always is a concern. I mean, so far it’s been smooth sailing, but there’s just always that concern.
Many of the products we buy from Dell (NYSE:DELL) and Supermicro and others are made in Mexico and products we have and we manufacture in Mexico. So you just have those concerns. I think if all that is smooth, we’re going to be we expect to be at the higher end of our range. But we just have to see how the next couple of weeks play out. It’s certainly been touch and go with some of the geopolitical stuff.
Eric Martinuzzi, Analyst, Lake Street: Got it. Thanks for taking my questions.
Conference Operator: Thank you. Next question is coming from Yal Trasky from Northland Capital Markets. Your line is now live.
Jamie Lerner, Chairman and CEO, Quantum Corporation: Thank you. And congrats on a really nice bit of surprise that’s great to see. Thank you. Yes. You mentioned you had a large U.
S. Federal deal. Was it across the whole product portfolio or was it focused to a certain product? Yes. I mean, we started about two years ago really focusing on the high margin and highly differentiated parts of our portfolio.
And our work with the U. S. Government, particularly with various defense and intelligence agencies are a big part of what we do. So products that are really strong there are very high speed analytic platforms, the storage that sits behind very high speed and very high secure planning, research and analysis algorithms. Also a lot of our portfolio is focused on cybersecurity for very secure environments.
And we have an element of our portfolio that are shipboard systems. They’re designed to be deployed in naval environments. They’re shock and vibe tested. They’re humidity tested to be put on board a ship. And all of those parts of the portfolio have been doing really well.
And especially in the area that’s kind of new to us in terms of a growth area has been the national laboratories as well. And the one thing that’s gone, we didn’t really understand initially, There were certain systems we sold to The U. S, certain U. S. Defense agencies that many other nations replicated the exact same system, making it very easy to communicate between groups.
And so some of the initial sales we had into the U. S. Government, we ended up getting other coalition nations, G7 nations buying copycat systems because of the ease of integration and coordination. So all of those things have been going well for us and we think we can really grow a lot more in that area. Yes.
And let me add on to that, Jamie. When you look at the higher quality of earnings that we’re having, we’re on track to have the best year in Fed since the ’twenty two fiscal ’twenty two. And Fed year over year is up 54%. So the effort that the team and the company has put in, as Jamie said, on these higher quality earnings type of products, it’s we’re showing proof points coming through and US Fed is a great data point for that. Great.
That’s great. Ken, so your OpEx for December was $30,500,000 non GAAP basis and you’re guiding to $30,000,000 And that does reflect significant cost takeout relative to a year ago. Is there more cost takeout that we should be anticipating? Or are we now at the maximum cost takeout? No.
I think that there’s always room to optimize within an organization. And we’re going to continue to find those ways. The majority of our efforts, I think, are substantially complete. Calendar Q1, for all companies that tends to be a little bit higher OpEx quarter just because you start payroll taxes and certain elements like that come back into play. We will still continue to look for efficiencies, but I think the majority of it is it is on track and completed substantially complete.
Conference Operator: Just to
Jamie Lerner, Chairman and CEO, Quantum Corporation: be clear, I mean the purpose for OpEx that we should be modeling would be about $30,000,000 a quarter here? That’s what we’re guiding folks to, right? Yes. Okay, great. All right.
And then thoughts on backlog trajectory for the March? We’re guiding towards the exact same level. Yes, we’re still giving people the 8% to 10% is what we’re targeting for within our number. Okay. Got it.
And then if you could give just demand charge directly in terms of bookings for the December for your four key products at Myriad ActiveScale, the recently launched All Flash DG compliance intake? Yes. I think there is strength in a variety of areas. I mean that covers a lot of ground. I mean where we surged ahead of our competition is in data protection.
We were first to market with All Flash data deduplication and data compression backup targets in the DXI portfolio. And we do have the largest centralized replication target and backup target with the DXi 9,200, which is well over two petabytes of storage in a single system. And we’ve announced some even bigger all class systems. So that’s part of the portfolio just has continued to grow really well. I think we’ve seen more normalization in media and entertainment with a lot of strength in sports and a lot of strength in episodic.
So I would say StoreNex is running at historical highs. In tape, what’s interesting is the demand on the i7. This is kind of a pretty amazing new product that has 2,008 tape cartridges and a standard rack. No one has achieved anything even close to that. It is the highest and is the largest and most dense storage appliance ever built by man.
It just is. And it’s a pretty incredible piece of innovation, even though a lot of us are probably thinking Tate’s a pretty old thing. But I think it has captured people’s imagination in that there’s just a new mindset now in the world of where you can analyze everything and anything in ways no one thought. The new mindset is we better keep every single piece of data we’ve ever created. And the i7 is the most efficient way for a large enterprise to keep every piece of data they’ve ever collected, created, come across and do it in a very cost effective way.
You can do it at prices lower than any cloud provider. You can do it at there’s just no one who can do it cheaper than plugging in these i7s. So seeing the demand for that has been really, really interesting. And as it relates to Myriad, we continue to work with thought leaders. We are working with some of the world’s most advanced quantum computing companies that have this voracious demand for high speed storage and particularly quantum computers are being used for encryption very, very, very advanced and computationally and storage intensive encryption.
And we’ve been working with companies in that area and working with a variety of life sciences companies in and around analytics use cases with Myriad as we get that product to continue to scale. We had some press releases about what we’re doing scale wise and some of the AI specific functions we’re adding to increase its work with NVIDIA (NASDAQ:NVDA) GPUs and how it takes advantage of GPUs. So I’m pretty pleased with how all that’s going. I think after seven years of really hard work, I think we’ve got a portfolio that is very differentiated, very unique and just about every product has been entirely refreshed. Now some investors have looked at that and said that’s caused you to spend a lot of money, that’s caused you at times to be cash flow negative.
And we consciously made those investments. And our investors know that we had a very old company with old products and we had to dig in deep with some lenders to spend the money to refresh these products. But this is the year where we’re committing and we’re pretty confident that the company because of these investments moves into a growth mode. We switch from investing money into these products to generating money from these products and we go back into growth mode. And I think with that, we’ve indicated and we’ll share more data that we have a variety of, let’s just call them, irons in the fire where we’re going to remove our debt.
And that is millions of dollars of interest we pay per quarter. And when we resolve that debt, I mean, you don’t have to do a lot of heavy math to see how much cash the company generates when we no longer have these heavy interest payments. And you bring all that together, we’re pretty excited about what we’re looking at going forward. Yes, absolutely on that portion. And thank you for all that color, Jamie.
That was really great. Just one real quick. When you talk about being in a position to be in growth going into fiscal year twenty twenty six, Of these products, which one do you think will have the biggest dollar increase? We don’t break out product lines. I would say, we’re seeing we really talked about our portfolio in terms of primary and secondary.
And we are driving growth on both sides. Obviously, Myriad is the growth driver in primary and really the i7 and DXi are the growth drivers in secondary. And what’s interesting about active scale, we can have S3 object stores that are primary incarnations as all flash and they can be secondary incarnations where they tiered a tape. So that product is pretty interesting and that it can be used in high speed use cases as well as backup and data protection use cases. So short answer, we expect growth both in primary and secondary to meet our objectives.
And Jamie, just to add some proof points to that number, like StoreNext, it’s up almost 50% year over year. And all those refreshed portfolios that Jamie was talking about, VI7 DXi, all of those are on positive trajectories on a year over year basis. So definitely the investment is paying off. Okay. And then I just want to double click on to the DXI here in terms of the competitive landscape.
Clearly, there are a lot of all flash array primary storage vendors. And there are some of these backup software only vendors that are partnering with those all flash arrays to potentially effectively replicate what you guys do. But is it fair to say that that’s not really the target market? It’s really more the customers who desire and want a turnkey appliance that has typically been hard drive based? Well, I mean, when you need to back up your most precious and important data, you have a couple of choices, right?
You have the big incumbent players. IBM (NYSE:IBM) has products in that area. Dell has products in that area. Smaller vendors have products in that area. None of them offer all flash twenty:one and in some cases our products seventy:one effective deduplication.
You just that is not available all flash and certainly not in line. Now, there are other people who say yes, like a pure storage would say sure you can back up against us and they have an all flash appliance that is three to four times more expensive than any of us operate in the backup space and they don’t have anywhere near the efficacy of deduplication that a product like a variable length deduplication algorithm like the XI has. So it’s not really apples to apples. I mean, taking a very poor compression algorithm and a very poor deduplication algorithm in an all flash bundle and putting it on an all flash super micro box, that doesn’t give you the same outcome. So it’s not that it’s packaged as an appliance because we sell the DXi software by itself if someone wanted that.
But it’s building your product to take advantage of NVMe storage and that takes a lot of engineering rather than just, hey, plunk it down on an all flash box. I mean, you have to reengineer your product to take advantage of the PCIe lanes and take advantage of speaking to NVMe natively versus treating it like it’s a hard drive. And that’s why the others have talked about it, but Dell does not have all flash data domain products. IBM does not have all flash deduplication products. Hitachi (OTC:HTHIY) does not have that.
NetApp (NASDAQ:NTAP) does not have that. They just are not major storage vendors that have that technology available today. I assume they’ll chase us, but they don’t have it today. Certainly smaller vendors like an exit grid don’t have anything like that today. And we’re just taking share with that technology.
And how big is that market overall you think? I mean, it’s enormous, right? I mean, we participate in very small percent. We have a few percentage points of this market. This is a market that’s measured in many, many billions.
I don’t have the latest Gartner (NYSE:IT) number in front of me, but it’s tens of billions. And but we don’t play in the whole market. We play against certain areas in that market. We’ve been very successful in financial services. We’ve been very successful in Europe.
Our European team is just incredibly well with it. Our Asia team has done really well. And now we put a lot of focus on making movies and television and sports. I mean that’s what our storage really did in The U. S.
And now we’re building that muscle back in North America how to not just help people make movies, but how to backup data as well. And that’s a big part of what we’re doing. Great. Thank you. Thanks for taking all my questions.
Conference Operator: Thank you. We’ve reached the end of our question and answer session. I’d like to turn the floor back over to Jamie for any further or closing comments.
Jamie Lerner, Chairman and CEO, Quantum Corporation: Well, listen, thank you, everyone. We were excited about what lays in front of us. Our goals are pretty simple. We need to get cash flow positive this year. We need to return to growth this year.
And we want to do some clever negotiation to move to a debt free company. And by doing that, we think we have a very different outcome than we’ve seen in the past. And I want to end with a final comment. The name Quantum Corporation was created in 1979. And this company went public in either 1983 or 1984.
So I find it a little humorous that I’m making this clarification, but we are not a quantum computing startup. We’re a data storage company that’s been traded publicly since 1983, ’19 ’80 ’4 going on forty years. So if there is any confusion, let me end it here. We’re a data storage company. We definitely work with quantum computing companies and we help them store their data.
But we do not build quantum computers. So with that, thanks everyone and we’ll talk to you in ninety days.
Conference Operator: Thank you. That does conclude today’s teleconference webcast. You may disconnect your line at this time and have a wonderful
Jamie Lerner, Chairman and CEO, Quantum Corporation: day.
Conference Operator: We thank you for your participation.
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