Quantum (QTM) Q3 2012 Earnings Call January 25, 2012 5:00 pm ET Executives Shawn D. Hall - Senior Vice President, General Counsel and Secretary Linda M. Breard - Chief Financial Officer, Chief Accounting Officer, Senior Vice President of Finance, IT and Facilities Jon W. Gacek - Chief Executive Officer, President, Chief Operating Officer and Director Analysts Brian Freed - Wunderlich Securities Inc., Research Division Catharine Anne Trebnick - Northland Securities Inc., Research Division Eric Martinuzzi - Craig-Hallum Capital Group LLC, Research Division Glenn Hanus - Needham & Company, LLC, Research Division Alex Kurtz - Sterne Agee & Leach Inc., Research Division Shebly Seyrafi - FBN Securities, Inc., Research Division Presentation Operator
With that, I'll turn the call over to Jon Gacek.Jon W. Gacek Thanks, Shawn. Thank you for joining us today as we report our third quarter results. For today's call, I'm going go to start with a summary of the quarter's business highlights, including revenue momentum and product launches. Linda will provide more financial color and detailed results for the quarter, and then I will come back to discuss our view on the macro environment and provide Q4 guidance. Overall, we are pleased with this quarter's results and continued strengthening in our model and balance sheet. We had good momentum in both data protection and big data management and archive solutions. Here are several important highlights: First, we had branded revenue growth. This is the ninth consecutive quarter of year-over-year branded revenue growth. The expansion is being driven by adding new customers, increased channel traction and the revenue from new products. Specifically, we added approximately 140 new midrange and enterprise tape customers. And for DXi, we added 170 new customers in Q3. This is the first time we have reported this number, and to put it into context, we added 120 new DXi customers in Q3 of fiscal 2011 and 110 in Q1 and 140 in Q2 of this fiscal year. We believe this is a very positive trend and is reflective of our product and channel efforts this year. Our focus on both growing our existing channel and deepening our relationships with those partners continues. On a year-over-year basis, our DXi revenues through to channel increased 23%. The number of channel partners selling DXi increased 19%, and the number of new DXi customers obtained through channel partners increased 73%. All 3 of these metrics are good indicators of the momentum we are gaining with our data protection product and the positioning through the independent channel.
Second, we had a strong quarter with our big data management and archive products, with total revenue for this category up 18% year-over-year and 6% sequentially. Specifically, our StorNext appliances, which includes the StorNext Archive Enabled Library, StorNext M330 and Q-Series Storage system, were very strong, and customer interest in these recently launched products is very high. We believe that our big data strategy of continuing to invest in both StorNext as a standalone software product and new StorNext appliances is the right one and key to our overall growth objectives.Our StorNext software offerings serves the needs of our installed base customers and our traditional use cases, where users have decided on their hardware choices and want to continue to own the productization of their StorNext solution. Our StorNext appliances enable us to significantly broaden our total available market and more deeply penetrate new market segments by allowing customers to purchase the whole solution from Quantum. Another highlight was the continued DXi6701/02 momentum in Q2. We thought we might see a slight fall-off from the incredible Q2 launch quarter, but in fact, these products grew sequentially in both revenue and unit. In addition, we saw strong traction with our new entry-level DXi4601. We provide the unique offering with our DXi data protection solutions. An analyst firm, IDC, recently completed a study of our DXi solutions, showing that for every dollar invested, customers are seeing a return of $4.75, with the typical time to payback of 7 months. In addition, further demonstrating the leverage we are -- we get as our DXi business grows, the number of customers buying both a DXi appliance and a Quantum tape system more than doubled from the same quarter last year and was up 12% sequentially. Read the rest of this transcript for free on seekingalpha.com