Data management technology provider Quantum Corporation (QTM) recently announced impressive preliminary results for third-quarter fiscal 2015. The company’s earnings topped the Zacks Consensus Estimate despite a marginal year-over-year decline in its top line.
Quantum’s third-quarter total revenue came in at roughly $142 million, slightly below the low end of the company’s guidance range of $145 million 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 the 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 a year ago. 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 was $7 million as against 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 bottom-line improvement was mainly driven by operational efficiency achieved through initiatives undertaken over the last 18 months.
Quantum’s earnings per share on a GAAP basis were 3 cents per share as against a loss of a penny a year ago. 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 stock had gained approximately 4.8% on Jan 13 after the company posted impressive preliminary results. However, it plunged 8% yesterday and closed trade at $1.61.
The company is scheduled to release its full third-quarter results on Jan 29, after the market closes.
Founded in 1980, Quantum is one of the leading providers of scale-out storage, archive and data protection solutions for capturing, sharing and preserving digital assets in physical and virtual environments over the entire data lifecycle. The company serves more than 100,000 customers including small businesses as well as major enterprises.
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 carrying a Zacks Rank #2.
(We are reissuing this article to correct a mistake. The original article, issued on Jan 14, 2015, should no longer be relied upon.)
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