Shares of data management technology provider Quantum Corporation (QTM) gained nearly 4.8% yesterday after the company announced impressive preliminary results for third-quarter fiscal 2015. The company’s bottom-line results topped the Zacks Consensus Estimate despite a marginal year-over-year decline in the top line.
Quantum’s third-quarter total revenue came in at roughly $142 million, slightly below the company’s lower-end guidance range of $145 to $150 million as well as from the year-ago comparable quarter level of $146 million. The Zacks Consensus Estimate for revenues is pegged higher at $148 million.
The year-over-year decline in the top line was mainly due to a 31% fall in revenues from the original equipment manufacturer tape automation partners which was partially offset by strong performance registered at scale-out-storage and DXi businesses. Revenues from scale-out storage grew $12 million year over year to $27 million while DXi revenues reached $24 million from $1 million in the year-ago period.
Despite soft top-line performance, Quantum reported a significant improvement in its operating and net income. The company’s GAAP operating income came in at nearly $10 million as against a GAAP operating loss of $80 million. Excluding one-time items, non-GAAP operating income came in at $14 million, registering a year-over-year increase of $5 million.
The company’s GAAP net income increased to $7 million from a GAAP net loss of $2 million in the year-ago quarter. Excluding all one-time items, non-GAAP net income jumped more than 83% year over year to $11 million. The company revealed that the year-over-year improvement in bottom line was mainly driven by the operational efficiency achieved through the initiatives undertaken over the last 18 months.
Quantum’s earnings per share on a GAAP basis improved to 3 cents per share compared with a loss of a penny. On a non-GAAP basis, earnings doubled to 4 cents. Further, the company’s adjusted earnings (including stock-based compensation but excluding all other one-time items) came in at approximately 3 cents. The Zacks Consensus Estimate is a penny lower at 2 cents.
The company is schedule to release its full third-quarter results on Jan 29, after the market closes.
Quantum Corporation is one of the world's leading storage suppliers in its served markets — desktop hard disk drives (HDDs), tape drives, network attached storage appliances, solid state systems, HDDs for consumer electronics and digital video recording market and DLTtape automation systems. The company is also a leading supplier of high-end HDDs. Quantum's HDD manufacturing partner is Matsushita-Kotobuki Electronics Industries Ltd.
We believe the secular growth of digital data and modest growth in the total addressable market are expected to be beneficial for the company. Additionally, new product launches and go-to-market strategies should act as growth catalysts for the company.
Currently, Quantum has a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other stocks in the Computer-Storage Device industry worth considering are Datalink Corporation (DTLK), Dot Hill Systems Corporation (HILL) and Qumu Corporation (QUMU), all sporting a Zacks Rank #2.
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