Quantum's CEO Discusses Q4 2012 Results - Earnings Call Transcript

Quantum (QTM)

Q4 2012 Earnings Call

May 09, 2012 5:00 pm ET

Executives

Shawn D. Hall - Senior Vice President, General Counsel and Secretary

Jon W. Gacek - Chief Executive Officer, President, Chief Operating Officer and Director

Linda M. Breard - Chief Financial Officer, Chief Accounting Officer, Senior Vice President of Finance, IT and Facilities

Analysts

Ryan R. Bergan - Craig-Hallum Capital Group LLC, Research Division

Glenn Hanus - Needham & Company, LLC, Research Division

Catharine Anne Trebnick - Northland Securities Inc., Research Division

Cindy Shaw - DISCERN Investment Analytics, Inc

Brian Freed - Wunderlich Securities Inc., Research Division

Presentation

Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Quantum Corporation Fourth Quarter 2012 Conference Call. [Operator Instructions] This conference is being recorded today, May 9, 2012. I'd now like to turn the conference over to Mr. Shawn Hall, General Counsel. Please go ahead.

Shawn D. Hall

Thank you, and good afternoon, and welcome. Here with me today are our CEO, Jon Gacek; and our CFO, Linda Breard. The webcast of this call, our earnings release and a quantitative reconciliation of any GAAP and non-GAAP financial measures discussed today can be accessed at the Investor Relations section of our website at www.quantum.com and will be archived for one year.

During the course of today's discussion, we will make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding our business strategies, opportunities and priorities, anticipated product launches and plans, and future financial performance. We'd like to caution you that our statements are based on current expectations and involve risks and uncertainties that could cause actual results to differ materially. We refer you to the risk factors and cautionary language contained in today's press release, as well as to our reports filed with the Securities and Exchange Commission from time to time, including our most recent 10-K filed on June 14, 2011, and our most recent 10-Q filed on February 9, 2012. These risk factors are incorporated by reference into today's discussion, and we undertake no obligation to update them in the future.

With that, I'll turn the call over to Jon Gacek.

Jon W. Gacek

Thanks, Shawn. Welcome to our fiscal Q4 earnings call. Today, I'm going to address several key business points from Q4 and the full year and Linda will walk you through the detailed results for Q4. I will then come back and talk about our market opportunity in fiscal '13 and beyond for data protection, big data management and archive and cloud solutions, describe our key achievements from fiscal 2012 that position us for overall growth this year and close with our guidance for the current quarter and fiscal '13.

In addition, today we announced in a separate press release a technology partnership with Amplidata that will allow Quantum to offer a unique and new category of storage solutions for big data management, archive and protection as well as cloud customers.

I will touch on this more at the end of the call, but I encourage you to read the release as it provides detail about the unique capabilities of the Amplidata technology and the power of tightly integrating it with our StorNext appliance strategy.

So let me move to the results. For Q4, we reported revenue of $160.3 million. This was within our guidance range of $160 million to $170 million, but clearly at the low end of that range. As we mentioned in our last earnings call, we entered the quarter with very positive momentum driven by our new products, specifically DXi and StorNext appliances. But we tempered that enthusiasm due to overall macroeconomic concerns generally, and specifically, concerns with Europe.

I'm going to address the geographic results first. We were very strong in North America, and specifically strong in StorNext, DXi, midrange tape automation and tape media. In Asia, this was the first quarter this year where we didn't exceed our plan and the shortfall was across all products. In Europe, like others in our industry, we were below plan overall and had difficulty closing the larger deals. More specifically, from a product perspective, we did okay in Europe on DXi and StorNext, but we were weak in Enterprise tape. There is no question that our revenue results being at the low end of our range were primarily due to geographic issues.

In terms of Q4 highlights, the most significant, from a product revenue perspective was disk systems and software revenue, including related maintenance of $37.6 million. This is a record, despite it being a seasonally weak quarter and the impacts from Europe and Asia mentioned earlier. This category grew 28% year-over-year and was up slightly compared to Q3, which is our seasonally strongest quarter. The growth was driven by record branded disk revenue, including approximately 100% sequential growth in DXi8500 sales and branded StorNext software and StorNext appliance revenue. We added 160 new Disk and Software customers, and we closed on a number of large deals with both new customers and existing customers that made follow-on orders. In short, we are very pleased with the overall result in disk systems and software product revenue category.

Another highlight of the quarter was the launch of our DXi V1000, which is our DXi product, and along with our vmPRO virtual protection software, the backbone of our cloud data protection platform. In addition, Xerox launched their backup and disaster recovery cloud services offering which is based on this platform. I encourage you to go to the Xerox website to learn more about how they use Quantum technology. That can be found at acscloud.com, under the Cloud Backup and Disaster Recovery as Service tab. We think this is a very important first step and you're going to see us do more of this going forward.

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