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Quantum Corp. F4Q10 (Qtr End 03/31/10) Earnings Call Transcript

Most of these products began shipping during the March quarter, during which we also prepared for last month launch of the new Scalar enterprise library, and this week’s announcement of the new DXi plans that design for SMB and remote office customers. Our financial model, product introduction, and fiscal 2010 results, provide a strong foundation for growth in 2011.

Now I move to the results. Revenue for fiscal 2010 and the fourth quarter were $681.4 million and $164.5 million respectively. Non-GAAP EPS for the year was $0.26 and for the fourth quarter was $0.04, compared to $0.18 in fiscal 2009 and $0.01 in the year ago quarter.

When we evaluate our performance, there are several measures that are important to both our fiscal 2010 results, and our mid to long-term business strategy. These include the branded versus OEM revenue mix, non-GAAP gross margin, disk systems and software revenue growth, non-GAAP operating profit, and finally cash generation and EBITDA. Let me comment on each of these.

For the fourth quarter, our branded business represented 78% of our non-wealthy revenue, compared to 70% in the same period the year ago. On a year-over-year basis, our fourth quarter branded revenue grew 8%. As we look to fiscal 2011, we expect our branded business to continue to grow for tape, disk systems and software products.

Non-GAAP gross margin for fiscal 2010 was 44.5%, up from 40.8% in fiscal 200, and is our best result in ten years. For Q4, non-GAAP gross margin was 44.4%, compared to 39.6% for the same quarter last year. This is a 480 basis point improvement, and reflects the increase in $6.4 million in gross profit dollars on slightly lower revenue.

Disk systems and software revenue was $95 million for fiscal 2010, and $22.8 for the fourth quarter. Branded disk and software revenue in Q4 was up 29% year-over-year and comprised 96% of the total, compared to 70% of the total a year ago. As we look forward to fiscal 2011 we expect this product category to be a significant driver of growth. The end user market is large, we have excellent products, and the independent channel partners want an alternative set of solutions to sell to their customers.

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