Quantum (NASDAQ:QMCO) reported fiscal third-quarter 2026 results that management said exceeded the high end of its forecasted range, citing improved execution, stronger backlog, and benefits from recent restructuring actions. The company also discussed an increasingly volatile component supply environment that is influencing its near-term outlook, even as it described demand as strong across enterprise and hyperscale customers.
Management cites stronger execution, rising backlog
Chief Executive Officer Hugues Meyrath said the company has spent the past two quarters putting “a deliberate structure and focus” in place to execute its operating plan. He said Quantum has seen “meaningful improvement in revenue, pipeline, and backlog,” and noted that the company has delivered “two consecutive quarters of healthy backlog.”
AI-driven infrastructure pressures and supply constraints
Meyrath framed the quarter against a market backdrop where AI is accelerating demand while also pressuring infrastructure decisions. He said customers are dealing with cost, power, cooling, and long-term data retention requirements, while AI-driven demand is increasing pressure on global supply chains.
Quantum highlighted tight availability for components including memory, disk, and flash, with rising prices and longer lead times. Meyrath said that over the prior 10 days the company had seen pricing “double and in some cases triple,” and described a situation reminiscent of the early COVID period, with an “unpredictable” path to stabilization.
Tape and cold storage emphasis; example deal discussed
Meyrath said Quantum’s tape portfolio is positioned to help customers manage rising costs and constrained availability of flash and disk. He described Quantum’s Scalar tape libraries as modern systems that can provide nearline accessibility for AI workloads, while offering “the lowest cost and lowest power consumption of any storage medium available,” according to his remarks.
Management said tape sales doubled quarter-over-quarter as customers shifted toward architectures designed to reduce reliance on constrained components and to improve long-term economics for warm and cold data.
As an example, Meyrath said Quantum secured a seven-figure deal in Q3 with a multinational production studio using ActiveScale Cold Storage integrated with Scalar tape libraries. He said the initial deployment is 100 petabytes, with plans to scale to 400 petabytes over time, and that the customer was able to repatriate content from the cloud to an on-premises archive while maintaining nearline access for AI-driven reuse.
Quantum also pointed to StorNext as a data movement platform that can migrate data from various storage platforms to tape, which management said can help customers reclaim capacity and avoid adding primary storage amid shortages and price increases.
Q3 financial results: revenue up, EBITDA positive
Chief Financial Officer William White, who was introduced on the call as Quantum’s newly appointed CFO, reported revenue of $74.6 million for the quarter ended Dec. 31, 2025, up from $62.7 million in the prior quarter and $68.7 million in the year-ago quarter. White said the outperformance was partially driven by strong backlog entering the quarter and strong shipments at quarter end, and he attributed a positive variance versus preliminary results to a conservative assumption related to deferred revenue contracts.
Quantum exited Q3 with backlog of more than $20 million, which White said was significantly above the company’s historical run rate of $8 million to $10 million. He said the company expects backlog to remain meaningfully above its historical run rate in fiscal Q4.
- GAAP gross margin: 38.8% (vs. 37.6% in Q2 and 40.6% in the prior-year Q3). White said the sequential improvement reflected initial operating efficiencies from a restructured service organization, while supply volatility could be a headwind to returning above 40% in the near term.
- GAAP operating expenses: $30.1 million (vs. $31.7 million in Q2 and $35.6 million a year ago). White said this was higher than preliminary results due to an additional provision tied to an outstanding receivable balance with Quantum Storage Asia (QSA) following termination of its distribution rights in fiscal Q2.
- Non-GAAP operating expenses: $26.9 million (vs. $24.8 million in Q2 and $30.1 million a year ago). White attributed the sequential increase primarily to higher variable sales and marketing expenses related to higher commissions, and the year-over-year decrease to restructuring-driven savings.
- GAAP net loss: $27.8 million, or $2.03 per share, compared with a $46.5 million loss, or $3.49 per share, in Q2 and a $75.3 million loss, or $15.35 per share, in the prior-year quarter. White said Q3 included $28.9 million in debt extinguishment costs tied to a term loan amendment involving conversion of term debt into a senior secured convertible note.
- Non-GAAP net loss: $4.9 million, or $0.36 per share, compared with a $7.1 million loss, or $0.54 per share, in Q2. White said the improvement reflected higher revenue and lower operating expenses, while the company continued to carry approximately $5.9 million of interest expense.
- Adjusted EBITDA: positive $2.9 million, improving from positive $0.5 million in Q2 and $0.8 million in the prior-year quarter, which White said was driven primarily by restructuring initiatives that lowered the cost structure.
Balance sheet and outlook: cautious due to fulfillment timing
White said cash, cash equivalents, and restricted cash totaled approximately $13.8 million at quarter end. Total outstanding debt consisted of $54.6 million of term debt and $75.9 million of convertible notes, with net debt of approximately $116.7 million.
Management highlighted a strategic debt exchange approved by shareholders in Q3: term debt held by Dialectic was exchanged for senior secured convertible notes, reducing outstanding term debt by about 50% to what Meyrath described as historically low levels. White noted that fair value adjustments for the convertible note and related forbearance warrants will be recorded each quarter and will be largely driven by Quantum’s stock price, introducing volatility into GAAP earnings going forward.
For fiscal Q4 2026, Quantum guided cautiously due to the difficulty of procuring critical components, emphasizing that the constraint is shipping timing rather than demand. White said the company expects:
- Revenue: approximately $68 million ± $2 million
- Non-GAAP operating expenses: approximately $27 million ± $2 million
- Non-GAAP adjusted net loss per share: -$0.33 ± $0.10 (based on an estimated 15 million shares outstanding)
- Adjusted EBITDA: breakeven ± $2 million
In the Q&A, Meyrath said demand remains strong and that backlog growth reflects both demand and component shortages, adding that backlog is growing faster than anticipated. He also said the services business challenge is more tied to execution—specifically discounting—than to contraction. On margins, management said it is difficult to guide given rapidly shifting component prices and lead times, and that maintaining Q3 margin levels in Q4 would be a “very good achievement” in the current environment.
About Quantum (NASDAQ:QMCO)
Quantum Corporation (NASDAQ: QMCO) is a technology company that develops and delivers data management and storage solutions for businesses and organizations worldwide. The company’s product portfolio includes hardware, software and cloud-based offerings designed to address backup, archive, primary storage and long-term retention needs. Quantum’s solutions are geared toward data-intensive environments such as media and entertainment, surveillance, government, education and healthcare, where large volumes of digital content must be reliably stored, managed and accessed.
Quantum’s flagship products include the StorNext® data management platform, which provides high-performance shared file storage and workflow acceleration, and the DXi® series of deduplication appliances, which optimize backup and recovery by reducing storage footprints and data transfer times.
