Quantum Corporation (NASDAQ:QMCO) Q3 2023 Earnings Call Transcript

Craig Ellis: Yes, thanks for taking the question. Jamie, congratulations on the five-year high quarterly revenues and Ken welcome to the team. I look forward to working with you. So, I’ll start with a clarification just on the quarter’s revenue upside versus initial guidance. Can you give us some further color on where that came from more on the hyperscale side, the enterprise side? And then what was the linearity of the strength to the quarter, pretty steady or was it more backend loaded?

Ken Gianella: Well, I’ll start with that. It came a little bit more back end, but the first thing we saw was strength in the supply chain coming back. So, having that kind of loosen up gave us the ability to fulfill more demand, particularly within the hyperscale side of things. The linearity side, it’s we tend to be to month one month two, a little bit lighter, with month three coming on strong, and that linearity kind of held true to it. But we were able to fulfill a little bit more demand, because the free up of the supply chain allowed us to ship some more of that pent up demand and backlog.

Craig Ellis: Got it? And, Jamie, I think when we spoke three months ago, one of the things you were looking for is that for some of the sales changes you’re making to really help accelerate primaries storage, and is that what you’re seeing and with the strength in Europe and Asia, because headline primary was pretty flattish, but just walk us through the impact you’re getting, as you make some of the adjustments to the sales team.

Jamie Lerner: Yes, I mean, I wouldn’t over rotate on primary, and that we can achieve the same or even stronger margins in secondary. The DSI product is our highest margin product, active scale is also often sold software only as you know, north of 80% margin. So there’s a lot of margin in the secondary products. And there’s a lot of products in secondary that are beyond just, take hardware. But what we’re seeing, and what we’re most focused on, is the ability to sell the whole portfolio. So, we have a lot of historic accounts that bought a product from us. And what we’re seeing through the new sales teams, the new sales training, and the new sales incentives, is going into our accounts and selling them a primary product, store next door surveillance, selling them secondary products, selling the management software, selling multiple products, and often those products as a solution where we combine multiple products to solve a business problem or solve a management initiative.

And, I think that’s been going well in Europe and Asia. And, the teams who were set it about a year behind in North America, but I’m seeing the pipeline, the initial deals, and I think that’s going to flow right through North America and have a pretty it should have a meaningful impact on our margins as that, as we roll through this, predominantly the US Sales Team.

Craig Ellis: Got it. And related to that, and selling the solution as subscription adds new customers or about 100 in the quarter looks like that was about the third consecutive quarter, getting that many new customers on subscription. What should we think through calendar 2023 for new customer adds to the program? Should it click along around 100 a quarter or do you see an inflection coming? And if so, what’s the catalyst?