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Quantum revenues sink, with upsurge predicted

Like many storage vendors, Quantum’s revenue took a dip last quarter and for the full year. The backup and scale-out storage specialist predicts it will rally beginning this quarter, however, due to a  pickup in video-related storage systems.

Quantum’s total revenue of $120 million for last quarter was down from $147.8 the previous year. It was Quantum’s fourth fiscal quarter, and its revenue for the year of $476 million was down from $553 million the previous year.

Quantum lost $50.2 million last quarter and $74.7million for the year, mainly due to a $55.6 million goodwill impairment charge. Its non-GAAP loss for the year was $2.6 million and it had a non-GAAP profit of $6.5 million for last quarter.

Quantum’s traditional products are in data protection – tape and disk backup. But its scale-out storage is its fastest growing segment and was approximately 27% of its total revenue last year. The Quantum scale-out portfolio is driven by its StorNext  file system, which also powers its Artico NAS appliance and Xcellis workflow storage. Quantum CEO Jon Gacek said he expects that product line to rapidly grow to cover use cases such as video surveillance, media and entertainment, life sciences, and sensor-based Internet of Things applications.

Quantum’s $33.1 million in scale-out revenue was a four percent increase year-over-year, and the vendor forecasted higher growth this year. Scale-out revenue of $126.5 million for last year grew 23%year-over-year, and Quantum executives said they expect that to grow to around $175 million to $200 million of its total $500 million revenue for this fiscal year. The expectation is also for a modest increase in disk backup and declines in tape backup for an overall decline in data protection revenue.

CFO Fuad Ahmad said Quantum added around 110 new scale-out customers last quarter and approximately 460 for the year.

Scale-out revenue increased despite a $7 million drop in deals of $1 million or more.

“We delivered $120 million … with the scale-out not having its big growth quarter,” Gacek said Tuesday on the earnings call. “To do a sports analogy, we won the game, we covered the spread and our best player didn’t really play well. The best player in this case is scale-out and I just think the scale-out opportunity will be there for us. We’re super well teed up.”

Quantum’s tape automation revenue of $44.7 million last quarter was down from $61.4 million the previous year, and disk backup revenue of $18.1 million in the quarter fell $7.1 million from the previous year.

In an interview after the call, Gacek said the opportunities in scale-out storage are greater than in traditional storage markets. “The traditional storage side of the company is still feeling pressure, but it’s the scale-out storage I see growing – there’s a lot of video where performance and access are important,” he said.

Gacek said Quantum has pulled back its investment in DXi disk backup, a platform that it has aggressively upgraded over the years. “There’s modest growth there,” he said. “We don’t go out of our way to spend a lot of money on DXi. We will upgrade servers and storage and stay current with application support, as opposed to having the fastest deduplication engine.”

He added that backup and scale-out products are often combined into large deals, where customers start out looking for backup and end up adding archiving for unstructured data.

“A lot of challenges of unstructured data can be solved with archiving,” he said. “Why pay a bunch of backup licenses when you can archive it?”

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