Quantum's Q1 Loss Wider Than Estimated, Revenues Plunge Y/Y

Quantum Corporation (QMCO) reported a first-quarter fiscal 2026 non-GAAP loss of $1.58 per share, considerably wider than the Zacks Consensus Estimate of a loss of 15 cents. The company incurred a loss of $1.57 per share in the year-ago quarter. The year-over-year wider loss was primarily attributable to reduced revenue levels, along with an increase in inventory provisions and elevated import tariff expenses.

QMCO generated revenues of $64.3 million, down 11% year over year. The top line missed the consensus mark by 12.8%. The contraction was mainly due to changes in product mix, as the company continues its transition toward a higher-value business model. Backlog at the end of the fiscal first quarter was about $10 million, which is toward the upper range of the company’s target run rate of $8 million to $10 million.

Quantum’s solutions and roadmap are well aligned with growth trends in AI, media and entertainment, data protection and long-term archiving. The company is restructuring teams to support its growth model, ensuring accuracy throughout the sales process from forecasting to customer support. Greater focus is being placed on top regional partners with improved cross-sell and upsell opportunities, alongside new partnerships in data protection and cybersecurity. In APAC, QMCO has expanded distribution in South Asia, India and China to strengthen reach and support. It continues to prioritize its most distinctive solutions, leveraging its portfolio as a key competitive advantage.

Despite the softer performance in the fiscal first quarter, QMCO remains encouraged by positive developments and renewed business opportunities following the recent leadership refresh. It expects its decisive actions to drive meaningful improvement in bottom-line performance beginning in the September quarter.

Quantum Corporation Price, Consensus and EPS Surprise

Quantum Corporation price-consensus-eps-surprise-chart | Quantum Corporation Quote

Product revenues declined 12% year over year to $37.5 million.

Service and subscription revenues totaled $24.9 million compared with $26.7 million in the previous year's quarter.

Royalty business generated $1.8 million in revenues, down 37.7% year over year.

Margins

Gross margin was 35.3%, down from 37.4% in the prior-year quarter, owing to higher inventory provisions for end-of-life products and increased import tariffs, partially offset by improved efficiencies in our service organization.

Non-GAAP operating expenses fell 2.6% year over year to $30 million. Although the company achieved savings from restructuring in fiscal 2025 and early 2026, these were largely offset by higher compliance costs from auditing and legal fees.

Adjusted EBITDA loss was $6.5 million compared with a loss of $2.2 million a year ago. The decline in adjusted EBITDA was mainly due to the same factors that led to the higher net loss.

Cash Flow & Liquidity

In the quarter under review, QMCO used $16.9 million of net cash from operating activities compared with $1.9 million used in the year-earlier quarter.

As of June 30, 2025, Quantum’s cash, cash equivalents and restricted cash amounted to $37.5 million, up from $16.6 million as of March 31.

Fiscal Q2 Guidance

Net sales are estimated at $61 million (+/-$2 million).

Non-GAAP operating expenses are expected to be $27 million (+/-$2 million), implying benefits from recent cost-reduction measures.

Non-GAAP adjusted basic net loss per share is projected at a loss of 26 cents (+/-10 cents).

Adjusted EBITDA is expected to be roughly breakeven.

Zacks Rank

QMCO currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here

Recent Performance of Peers

NetApp, Inc. (NTAP) reported first-quarter fiscal 2026 non-GAAP earnings of $1.55 per share, which beat the Zacks Consensus Estimate by 0.7%. The figure declined 0.6% year over year. The bottom line was within the company’s guided range of $1.48-$1.58. Revenues of $1.56 billion increased 1% year over year. The figure was within the guidance of $1.455-$1.605 billion. The top line beat the consensus mark by 1.2%.

Pure Storage (PSTG) reported second-quarter fiscal 2026 non-GAAP earnings per share (EPS) of 43 cents, which beat the Zacks Consensus Estimate by 10.3%. The company had posted non-GAAP EPS of 44 cents in the prior-year quarter. Quarterly revenues grew 13% from the prior-year quarter to $861 million, surpassing the Zacks Consensus Estimate by 1.8% and management’s guidance of $845 million.

Western Digital Corporation (WDC) reported fourth-quarter fiscal 2025 non-GAAP earnings of $1.66 per share, which surpassed the Zacks Consensus Estimate by 12.2%. The company reported earnings of $1.44 per share in the prior-year quarter. Management anticipated fiscal fourth-quarter non-GAAP earnings per share to be $1.45 (+/- 20 cents).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research