SAN JOSE, Calif. — Feb. 3, 2020 — Quantum Corporation (NASDAQ: QMCO) today announced it has entered into an agreement with Western Digital Technologies, Inc., a subsidiary of Western Digital Corp. (NASDAQ: WDC), to acquire its ActiveScale™ object storage business. The addition of the ActiveScale product line and talent brings object storage software and erasure coding technology to Quantum’s portfolio, and enables the company to expand in the object storage market. The acquisition demonstrates Quantum’s commitment to innovation and growth, extending the company’s leadership role in storing and managing video and unstructured data using a software-defined approach. Quantum and Western Digital are committed to executing a smooth transition for customers and key stakeholders, with Quantum providing post-closing continued support for ActiveScale products and a strong commitment to invest in - and enhance - the ActiveScale product line.  

The transaction is expected to close by March 31, 2020, subject to the satisfaction of customary closing conditions. Financial terms of the transaction were not disclosed. Quantum expects the initial financial impact of the transaction to be neutral to slightly accretive to current business operations and additional guidance will be provided with the release of the fiscal Q4 2020 financial results.

Object Storage and Erasure Coding; Key Technologies for Managing Video and Unstructured Datasets

Video and other forms of unstructured data are growing exponentially in every industry. IDC forecasts this type of data will represent over 80% of all the world’s data by 2022*. Examples of this unstructured data include video and images for entertainment, surveillance and security, marketing and training, and more. In addition, industries like genomics research, advanced driver assistance systems, geospatial exploration, and more are generating huge amounts of similar data. This content requires high-speed capture and processing (typically done with a file system like StorNext®), then is generally retained for many years or decades.

Object storage software has a number of attributes that make it particularly well-suited for a wide range of datasets:

• Massive Scalability: Store, manage and analyze billions of objects, and exabytes of capacity.

• Highly Durable and Available: ActiveScale object storage offers up to 19 nines of data durability using patented erasure coding protection technologies.

• Easy to Manage at Scale: Because object storage has a flat namespace (compared to a hierarchical file system structure) managing billions of objects and hundreds of petabytes o capacity is easier than using traditional network attached storage. This reduces operational expenses.

Customers Increasingly Rely on Object Storage Software for Active Archives

Quantum has a history of success delivering object storage and has been selling and supporting the ActiveScale product line for over five years. Object storage can be used as an active-archive tier of storage – where StorNext file storage is used for highest performance ingest and processing of data, object storage acts as lower cost online content repository, and tape acts as the lowest cost cold storage tier, as shown in the diagram below.

In a diverse range of industries spanning media and entertainment, genomics and life sciences, autonomous vehicle research, and university research, ActiveScale can serve a number of use cases:

• Object storage in media production: Object storage is used as a long-term content repository for video content, in movie and TV production, in sports video, and even for large corporate video departments. Customers in movie and TV production require very high performance ingest, edit, processing, rendering of their video files, which typically is done with a file system like StorNext. Once content is finished, it is preserved in an object store, with StorNext data management handling the data movement between file and object tiers.

• Object storage for enterprise archiving and long-term retention: As object storage has matured, all leading backup applications can now backup data to an object target, and enterprise IT departments are looking at object storage as a long-term content repository.

• Object storage for genomics and life sciences: Genomics sequencing and other life sciences research generates a massive amount of data, that must be processed and analyzed quickly (typically with a clustered file system like StorNext), then archived on object storage.

• Object storage for video surveillance: Object storage is also used as a tier for multi-petabyte surveillance infrastructure. Video is typically captured and recorded on higher-performance servers, then archived on object storage.

To serve the needs of these use cases and others, Quantum StorNext is certified with many leading public and private object stores today. With the addition of the ActiveScale product line, Quantum will remain committed to maintaining an open ecosystem of certified third-party object stores, with StorNext providing the ability to move data to these third-party object tiers.

Supporting Quotes

“As Quantum returns to a growth path, we will be evaluating strategic acquisitions that bolster our technology portfolio,” says Jamie Lerner, President and CEO, Quantum. “Object storage software is an obvious fit with our strategy, our go-to-market focus, and within our technology portfolio. We are committed to the product, and to making ActiveScale customers successful, and we look forward to engaging with them to solve their most pressing business challenges around storing and managing unstructured data. With the addition of the engineers and scientists that developed the erasure-coded object store software, we can deliver on a robust technical roadmap, including new solutions like an object store built on a combination of disk and tape.”

“With Quantum’s resources, technical expertise and focus on solving customers’ challenges with managing video and other unstructured data, we believe ActiveScale will enable new value for customers,” said Phil Bullinger, senior vice president and general manager of Western Digital’s Data Center business. “Western Digital and Quantum are each committed to continuity of support for existing ActiveScale customers.”

Additional Resources

• To learn about Quantum Object Storage Solutions: https://www.quantum.com/en/products/object-storage/

• *IDC Vendor Spotlight, sponsored by Quantum, ”Managing Unstructured Data Growth Requires a Fresh Approach”, January 2020. To download visit: https://www.quantum.com/globalassets/documents/idc-vendor-spotlight.pdf

About Quantum

Quantum technology and services help customers capture, create and share digital content – and preserve and protect it for decades. With solutions built for every stage of the data lifecycle, Quantum’s platforms provide the fastest performance for high-resolution video, images, and industrial IoT. That’s why the world’s leading entertainment companies, sports franchises, researchers, government agencies, enterprises, and cloud providers are making the world happier, safer, and smarter on Quantum. See how at www.quantum.com.

###

Quantum and the Quantum logo are registered trademarks or trademarks of Quantum Corporation and its affiliates in the United States and/or other countries. All other trademarks are the property of their respective owners.

Forward-Looking Statements

This press release contains “forward-looking” statements. Quantum advises caution in reliance on forward-looking statements. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Quantum Corporation and its consolidated subsidiaries (“Quantum”) may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to statements regarding the expected closing of the proposed transaction, the intent of Quantum to evaluate strategic acquisitions in the future and the anticipated benefits and impact of the proposed purchase of the ActiveScale business by Quantum, and statements related to the anticipated size of the object storage market and Quantum’s ability to grow the ActiveScale business. Risks, uncertainties and assumptions include the possibility that conditions to closing the transaction may not be satisfied, such that the transaction will not close or that the closing may be delayed; risks that Quantum will not recognize the anticipated benefits of the transaction, including the risk of losing customers as the business transitions to Quantum; risks that Quantum cannot develop the technology to meet market needs and other risks related to the ActiveScale business; the need to address the many challenges facing Quantum’s existing businesses; the competitive pressures faced by Quantum’s businesses, including the ActiveScale business; risks associated with executing Quantum’s strategy; the distribution of Quantum’s products and the delivery of Quantum’s services effectively; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; and other risks that are described herein, including but not limited to the items discussed in “Risk Factors” in Quantum’s filings with the Securities and Exchange Commission, including its Form 10-K filed with the Securities and Exchange Committee on August 6, 2019. Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

SAN JOSE, Calif. — January 31, 2020 — Quantum Corporation (Nasdaq: QMCO) announced that the Company's common stock will begin trading on The Nasdaq Global Market beginning at 9:30 a.m. ET on Monday, February 3, 2020 under its existing symbol, "QMCO."

“Listing on Nasdaq signals the end of an arduous restructuring process, and validates our increasing confidence that the new, stronger, profitable Quantum is much better positioned for the future,” commented Jamie Lerner Chairman and CEO, Quantum. “With our relisting, we are pivoting to the second phase of transformation where we will be moving from making the company sustainable on a long-term basis to growing on a long-term basis. We have re-established Quantum as a leader in storing and managing video and video-like data, with differentiated solutions that meet a large and growing need. We have rebuilt the earnings power of Quantum, and we are now poised for sustainable profitability. This profitability gives us tremendous momentum as we further advance our transformation.”

About Quantum

Quantum technology and services help customers capture, create and share digital content – and preserve and protect it for decades. With solutions built for every stage of the data lifecycle, Quantum’s platforms provide the fastest performance for high-resolution video, images, and industrial IoT. That’s why the world’s leading entertainment companies, sports franchises, researchers, government agencies, enterprises, and cloud providers are making the world happier, safer, and smarter on Quantum. See how at www.quantum.com.

###

Quantum and the Quantum logo, are either registered trademarks or trademarks of Quantum Corporation and its affiliates in the United States and/or other countries. All other trademarks are the property of their respective owners.

“Safe Harbor” Statement: This press release contains “forward-looking” statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Specifically, but without limitation, the statements relating to the company’s profitability, long term growth and sustainability, the growing need for our products and the advancement of our transformation are forward-looking statements within the meaning of the Safe Harbor. All forward-looking statements in this press release are based on information available to Quantum on the date hereof. These statements involve known and unknown risks, uncertainties and other factors that may cause Quantum’s actual results to differ materially from those implied by the forward-looking statements. More detailed information about these risk factors are set forth in Quantum's periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled "Risk Factors," in Quantum's Annual Report on Form 10-K filed with the Securities and Exchange Commission on August 6, 2019. Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Media contacts:

Red Lorry Yellow Lorry – Quantum’s PR agency

USA: Kerry Quintiliani, +1 310-773-3760

UK/EMEA: Philip Iacob, +44 (0) 20 7403 8878

quantum@rlyl.com

SAN JOSE, Calif.—Quantum Corporation (OTC: QMCO) today announced financial results for its third fiscal quarter ended December 31, 2019.

Nasdaq Listing:

Quantum has received approval to list the Company’s common stock on the Nasdaq Global Market. Management expects shares of the Company’s common stock will begin trading on The Nasdaq Stock Market on Monday, February 3, 2020 under the ticker “QMCO.”

Highlights: Third Quarter of Fiscal 2020 vs. Prior-Year Third Quarter

• Gross margins increased 340 basis points to 45.6%
• Net Income increased by $9.0 million to $4.7 million
• Adjusted Net Income increased by $3.9 million to $7.3 million
• Adjusted EBITDA increased by $3.6 million to $14.7 million
• Revenue increased 1% to $103.3 million
• Research and development investments increased 18%

Jamie Lerner, Chairman and CEO commented, “We continued to advance our strategic transformation, focusing on margin expansion and profitability as we reposition Quantum as an innovator, poised to solve the biggest challenges around video and video-like data.”

The strong third fiscal quarter gross margin of 45.6% reflected a favorable sales mix and Quantum’s focus on a value-selling approach. Excluding the contribution from royalty revenue, the Company’s gross margin reached 43.4%, compared to 39.3% in the year-ago quarter, demonstrating the increased value it is providing to customers. This translated to a significant improvement in operating margin and a return to GAAP profitability, with $4.7 million in net income, compared to a net loss of $4.3 million in the third fiscal quarter last year. Year-to-date, Quantum’s gross margin was 43.3% compared to 41.7%, an improvement of 160 basis points.

“This return to profitability validates the success of our transformation and provides us momentum as we uplist to the Nasdaq,” Lerner continued.

Quantum achieved its profitability guidance for the quarter, despite generating revenues that were lower than expectations, primarily as a result of the volatility inherent to its hyperscaler business, where timing of large orders can fluctuate based on a variety of external factors.

“Our third quarter results demonstrate that with an improved sales mix, continued operational efficiency and sales discipline, we can drive incremental profitability even across slightly lower revenue,”Mr. Lerner added. The long-term business opportunity in the archive tape storage market remains significant, so while we expect our hyperscaler business in the short term to continue to be volatile, longer term we anticipate adding new hyperscaler customers, which will help address non-linear purchasing patterns from a concentrated customer base. As a result, we have made the prudent decision to adjust our full year guidance. This decision underscores the short-term volatility related to larger customers who are looking to leverage the reliability and value tape offers, giving us increased optimism in the opportunity as we work to accelerate top-line growth in fiscal 2021 and beyond.

“Our offerings in the video and video-like data portion of our business remained strong, and we continue to see growing demand for our differentiated solutions,” Mr. Lerner concluded. “Our focus is to increase the contribution from these products, which maintain a better margin profile, which should mitigate the timing of hyperscaler revenue over time. Our new F-Series solutions had their strongest quarter yet and I am encouraged with the momentum for these products, and this reinforces my confidence in sustainable, profitable growth.”

Third Quarter of Fiscal 2020 vs. Prior-Year Quarter

Revenue was $103.3 million for the third quarter in fiscal 2020, up 1% compared to $102.0 million in the year ago quarter.

Gross profit in the third quarter of fiscal 2020 was $47.1 million or 45.6% gross margin, compared to $43.1 million, or 42.2% gross margin, in the year ago quarter. Gross margins improved year over year primarily due to a sales mix weighted towards more profitable product lines and service offerings as well as cost reductions across a wide range of products.

Total operating expenses were $35.4 million, or 34.3% of revenue, in the third quarter of fiscal 2020 compared to $39.6 million, or 38.8% of revenue, in the year ago quarter. Selling, general and administrative expenses declined 15% to $26.1 million for the third quarter of fiscal 2020 compared to $30.5million in the year ago quarter. Research and development expenses were $9.3 million in the third quarter of fiscal 2020, up 18% compared to $7.9 million in the year ago quarter.

Net income was $4.7 million, or $0.10 per diluted share in the third quarter of fiscal 2020, compared to a Net loss of $(4.3) million, or $(0.12) per share, in the year ago quarter.

Excluding non-recurring charges, stock compensation and restructuring charges, Adjusted Net Income was $7.3 million, or $0.16 per diluted share in the third quarter of fiscal 2020, compared to $3.4 million, or $0.08 per diluted share, in the year ago quarter.

Adjusted EBITDA increased $3.6 million to $14.7 million in the third quarter of fiscal 2020, compared to $11.1 million in the year-ago quarter.

Year-to-Date Fiscal 2020 vs. Year-to-Date Fiscal 2019

Revenue was $314.7 million and increased 5% for the first nine months of fiscal 2020, compared to $299.4 million in the year-ago period. The growth was driven by a 10% increase in product revenue with growth across all product lines, which was partially offset by declines in royalty and service revenues. The modest decline in service revenues was primarily due to the timing of customer installation scheduling.

Gross profit for the first nine months of fiscal 2020 was $136.4 million, or 43.3% gross margin, compared to $124.9 million, or 41.7% gross margin, in the year ago period. Gross margins improved year over year primarily due to cost reductions in cost of service and across a wide range of products and a sales mix weighted towards more profitable product lines.

Total operating expenses for the first nine months of fiscal 2020 were $117.8 million, or 37% of revenue, compared to $129.2 million, or 43% of revenue, in the year ago period. Research and development expenses increased 13% to $27.1 million for the first nine months of fiscal 2020 compared to $24.0 million in the year ago period. Selling, general and administrative expenses declined 10% to $89.7 million for the first nine months of fiscal 2020 compared to $99.7 million for the year ago period due to lower costs associated with the financial restatement and related activities and overall lower operating expenses as a result of our efforts to streamline processes and tools and reduce our facilities footprint.

Net loss was $1.4 million, or $(0.04) per share, for the first nine months of fiscal 2020, compared to a Net loss of $(33.4) million, or $(0.94) per share, in the year ago quarter.

Excluding non-recurring charges, stock compensation and restructuring charges, Adjusted Net Income was $17.8 million, or $0.40 per diluted share for the first nine months of fiscal 2020, compared to $1.9 million, or $0.05 per diluted share, in the same period last year.

Adjusted EBITDA increased $15.9 million to $40.5 million for the first nine months of fiscal 2020, compared to $20.7 million in the year ago period.

Balance Sheet and Liquidity as of December 31, 2019

• Cash and cash equivalents of $7.5 million as of December 31, 2019, compared to $10.8 million as of March 31, 2019. These amounts exclude $5.9 million in restricted cash required under the Company’s Credit Agreements.

• Outstanding long-term debt as of December 31, 2019 was $152.4 million net of $14.6 million in unamortized debt issuance costs and $1.7 million in current portion of long-term debt. This compares to $145.6 million of outstanding debt as of March 31, 2019, net of $17.3 million in unamortized debt issuance costs and $1.7 million in current portion of long-term debt. The increase in long term debt from March 31, 2019 was primarily due to borrowings of $5.3 million at December 31, 2019 from the revolving credit facility to meet short term working capital requirements.

• Total interest expense was $6.4 million and $19.1 million for the three and nine months ended December 31, 2019, respectively.

A reconciliation between GAAP and non-GAAP information is contained in the financial information below. Additional information about Adjusted EBITDA and Adjusted Net Income information appears at the end of this release.

Outlook

The Company noted that the fourth fiscal quarter, excluding the impact of hyperscaler business, has historically been the lowest product revenue period of the year. For the fourth fiscal quarter of 2020, the Company expects revenues of $95 million plus or minus $5 million. The Company expects Adjusted Net Income to be $2 million plus or minus $2 million and related Adjusted Net Income per share of $0.04 plus or minus $0.04. Adjusted EBITDA is expected to be $10 million plus or minus $2 million.

Quantum is adjusting its full-year outlook. Management now expects total revenues for fiscal 2020 to be $410 million plus or minus $5 million and Adjusted EBITDA guidance to be $50 million plus or minus $2 million.

Settlement of SEC Investigation

The Company and the Securities and Exchange Commission ("SEC") have settled a cease-and-desist proceeding arising out of the SEC's investigation of the matters disclosed in the Company's Current Reports on Form 8-K filed on February 8, 2018, September 14, 2018 and August 6, 2019. The matters concern the Company’s historic accounting practices, internal controls and a restatement related to revenue recognition for transactions between the fourth quarter of fiscal 2015 and the second quarter of fiscal 2018. The settlement includes a cease and desist order and payment of $1.0 million as a civil penalty; the order may be viewed on the SEC’s website at .

Conference call

Management will host a conference call to discuss these results today, January 29, 2020 at 5 p.m. ET (2 p.m. PT).

Dial-in Numbers

• 844-369-8770 (U.S. Toll-Free)
• 862-298-0840 (International)

Audio Webcast

The conference call will be simultaneously webcasted on the investor relations section of the Company’s website at under the events and presentations tab. Following the conclusion of the live call, a replay of the webcast will be available on the Company's website for approximately 90 days.

Replay Numbers

• 877-481-4010 (U.S. Toll-Free)
• 919-882-2331 (International)
• Replay Passcode: 57411
• Replay Expiration: Wednesday, February 5, 2020

About Quantum

Quantum technology and services help customers capture, create and share digital content - and preserve and protect it for decades. With solutions built for every stage of the data lifecycle, Quantum’s platforms provide the fastest performance for high-resolution video, images, and industrial IoT. That’s why the world’s leading entertainment companies, sports franchises, researchers, government agencies, enterprises, and cloud providers are making the world happier, safer, and smarter on Quantum. See how at www.quantum.com.

###

Quantum and the Quantum logo are either registered trademarks or trademarks of Quantum Corporation and its affiliates in the United States and/or other countries. All other trademarks are the property of their respective owners.

Forward-Looking Statements

This press release contains “forward-looking” statements. Quantum advises caution in reliance on forward-looking statements. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of Quantum Corporation and its consolidated subsidiaries (“Quantum”) may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to any projections of revenue, margins, expenses, Adjusted EBITDA, Adjusted Net Income, cash flows, or other financial items; any projections of the amount, timing or impact of cost savings or restructuring charges and any resulting cost savings, revenue or profitability improvements; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Risks, uncertainties and assumptions include the need to address the many challenges facing Quantum’s businesses; the competitive pressures faced by Quantum’s businesses; risks associated with executing Quantum’s strategy; the distribution of Quantum’s products and the delivery of Quantum’s services effectively; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; estimates and assumptions related to the cost (including any possible disruption of Quantum’s business) and the anticipated benefits of the transformation and restructuring plans; the outcome of any claims and disputes; and other risks that are described herein, including but not limited to the items discussed in “Risk Factors” in Quantum’s filings with the Securities and Exchange Commission, including its Form 10-K filed with the Securities and Exchange Committee on August 6, 2019. Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Contacts:

Public Relations Contact:

Bob Wientzen

Quantum Corporation

720-201-8125

bob.wientzen@quantum.com

Investor Contact:

Rob Fink

FNK IR

646-809-4048

rob@fnkir.com

SAN JOSE, Calif. — Quantum Corp. (OTCPK: QMCO) today announced that Regan MacPherson has joined the company as Chief Legal and Compliance Officer.
MacPherson joins the company as it builds on a growing reputation for leadership in the high-speed processing and management of video and video-like data, and the long-term, low-cost archive of unstructured data. The new role underscores Quantum’s commitment to corporate governance as the company prepares to resume public trading on a national stock exchange. 

“Regan joins Quantum at a time when the company is transitioning from its reorganization phase and resuming a growth posture,” said Jamie Lerner, President and CEO of Quantum. “As we set the stage for more sustainable success, Regan’s track record for strong corporate governance and broad experience managing complex transactions makes her a welcome addition to a refreshed executive team.”

MacPherson has more than 20 years of corporate legal experience, including expertise in corporate law and governance, mergers and acquisitions, securities and transactional work, and managing legal risk while achieving business objectives. MacPherson previously served as the Chief Compliance Officer at Marvell Semiconductor and General Counsel at Seagate, bringing both storage industry and public company governance expertise to Quantum at a time when the company is poised for growth.

Prior to joining Marvell, MacPherson spent 12 years at Seagate Technology in a variety of legal roles, eventually joining the executive team as Senior Vice President and General Counsel responsible for Seagate’s global legal, government relations and security functions. 

“I’m am pleased to join Quantum at a critical juncture in the company’s resurgence,” said Regan MacPherson, Chief Legal and Compliance Officer, Quantum. “I see enormous potential for advancing the company’s open, accountable culture centered on building and empowering teams of people to achieve our business goals while touching society in impactful ways.”

Photo Link:https://www.quantum.com/regan-macpherson 

Photo Caption: Regan MacPherson, Chief Legal and Compliance Officer, Quantum

About Quantum

Quantum technology and services help customers capture, create and share digital content – and preserve and protect it for decades. With solutions built for every stage of the data lifecycle, Quantum’s platforms provide the fastest performance for high-resolution video, images, and industrial IoT. That’s why the world’s leading entertainment companies, sports franchises, researchers, government agencies, enterprises, and cloud providers are making the world happier, safer, and smarter on Quantum. See how at www.quantum.com.

###

Quantum and the Quantum logo are either registered trademarks or trademarks of Quantum Corporation and its affiliates in the United States and/or other countries. All other trademarks are the property of their respective owners.

“Safe Harbor” Statement: This press release contains “forward-looking” statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Specifically, but without limitation, the addition and potential contributions of Regan MacPherson to the Company and its leadership team, statements relating to the Company’s growth and related events are forward-looking statements within the meaning of the Safe Harbor. All forward-looking statements in this press release are based on information available to Quantum on the date hereof. These statements involve known and unknown risks, uncertainties and other factors that may cause Quantum’s actual results to differ materially from those implied by the forward-looking statements. More detailed information about these risk factors are set forth in Quantum's periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled "Risk Factors," in Quantum's Annual Report on Form 10-K filed with the Securities and Exchange Commission on August 6, 2019. Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

PR Contacts:

Bob Wientzen

Quantum Corporation

720-201-8125

bob.wientzen@quantum.com

Red Lorry Yellow Lorry (Quantum’s PR Agency)

Kerry Quintiliani

quantum@rlyl.com