Quantum Reports 11% Revenue Drop in Q1
Key Points
Revenue declined 11.1% in Q1 FY2026 compared to Q1 FY2025
Operating expenses fell sharply compared to the prior-year period, but core profitability deteriorated, with adjusted EBITDA deepening to negative $6.5 million.
Cash position increased from $16.6 million as of March 31, 2025, to $37.5 million as of June 30, 2025, following an $83 million equity raise, though dilution risk increased and no segment showed growth.
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Quantum (NASDAQ:QMCO), a provider of technology for unstructured data management, reported its fiscal first quarter 2026 results on September 10, 2025. The company posted an 11.1% revenue decline in Q1 FY2026 compared to Q1 FY2025, but improved its cash position with a major equity raise. Management highlighted ongoing restructuring and cost containment efforts as it strives for better performance in the quarters ahead. Overall, the quarter showed persistent business challenges but provided a stronger cash cushion and the launch of a new leadership team's turnaround plan.
| Metric | Q1 FY2026(Three Months Ended June 30, 2025) | Q1 FY2025(Three Months Ended June 30, 2024) | Y/Y Change |
|---|---|---|---|
| EPS (Non-GAAP) | ($1.58) | ($1.57) | 0.6 % |
| Revenue | $64.3 million | $72.3 million | (11.1 %) |
| Adjusted EBITDA (Non-GAAP) | ($6.5 million) | ($2.2 million) | 195.5 % |
| Gross Margin | 35.3 % | 37.4 % | (2.1 pp) |
| Cash, Cash Equivalents and Restricted Cash | $37.5 million | $17.5 million | 114.3 % |
Business Overview and Key Focus Areas
Quantum is best known for its focus on unstructured data management, which covers video, images, audio, and other large digital files. This type of data accounts for more than 80 % of all new data, making its efficient storage and management a growing priority for businesses. Quantum brings to market several enterprise storage solutions, such as Myriad all-flash software-defined storage, StorNext for flash and disk file management, ActiveScale object storage for building large data lakes, and DXi backup appliances for high-speed, deduplication-enabled backup. The product lineup also includes Scalar tape storage systems for long-term archiving, providing a full range of offerings from high-speed ingestion to long-term preservation.
In recent years, the company's main focus has been on meeting the expanding needs of customers in artificial intelligence, machine learning, and data analytics by providing reliable and secure ways to store and analyze massive amounts of unstructured data. Key factors for success have included expanding and supporting its comprehensive portfolio, providing global support and managed services, investing in technology innovation, and leveraging a network of distributors, value-added resellers, and original equipment manufacturer (OEM) relationships for broad market access.
Quarterly Performance: Revenue Pressures, Cost Actions, and Turnaround Efforts
Revenue decreased by 11.1% in Q1 FY2026 compared to Q1 FY2025. Both product revenue and service and subscription revenue declined, falling 12.0% and 6.6%, respectively. Royalty revenue, typically derived from patent or licensing agreements, also fell 37.8%. Management noted that performance for the period fell short of internal expectations. Service and subscription sales declined.
On the expense front, the company enacted significant cost reductions. Operating expenses dropped approximately 19.6% from the prior-year period, with selling, general, and administrative (SG&A) costs down over $8 million, and research and development spending cut by $1.6 million. Restructuring charges more than doubled compared to the prior-year period. Despite these reductions, core earnings performance deteriorated, as adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization and excluding certain items) moved deeper into negative territory, and the company was unable to generate a profit from operations.
Gross margin, which reflects the percentage of revenue left after deducting the cost of goods sold, contracted by over two points compared to the prior-year period. On the bottom line, Quantum’s net loss narrowed in dollar terms but widened on an adjusted basis, indicating cost cutting could not fully offset sliding revenues.
A major change during the quarter was a sharp improvement in cash holdings, rising from $17.5 million in the fiscal first quarter of 2025 to $37.5 million in 2026. This was not from operations, but the result of a share sale under a standby equity purchase agreement that raised approximately $83 million in net proceeds. While this new cash provided immediate liquidity and allowed Quantum to pay down its revolving credit line, it substantially increased the company’s share count, leading to dilution for existing shareholders. The company’s stockholders’ deficit improved due to the equity infusion, but liabilities continue to exceed assets by a wide margin.
Quantum’s chief executive and board have undergone a refresh, with a new CEO in place since June and new leadership in sales and marketing. The company has not highlighted major new product launches, customer wins, or segment growth in the period. Research and development investment was reduced.
Looking Ahead: Guidance and Areas for Investor Focus
Management expects revenue to reach $61 million, plus or minus $2 million, for Q2 FY2026. This outlook implies another sequential revenue decline. Adjusted operating expenses are expected to be $27 million, plus or minus $2 million. Management projects a non-GAAP adjusted net loss per share of $0.26, with an average share count of 13.3 million, reflecting recent equity activity. Adjusted EBITDA is forecast to be approximately breakeven. Management said it expects "noticeably improved bottom line performance beginning in Q2 FY2026," according to Hugues Meyrath
With no segments showing growth, future updates on unstructured data solutions, subscription sales, and new customer wins will be particularly important in evaluating whether Quantum’s turnaround tactics are gaining traction.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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