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Overland increases revs, losses while waiting for Sphere 3D

Overland Storage had significant revenue increases while continuing to lose money last quarter as it absorbed Tandberg Data while waiting to be absorbed by Sphere 3D.

Overland Tuesday reported its earnings for last quarter and its fiscal year that ended June 30, which will likely be its last annual revenue report before it merges with Sphere 3D. Overland announced the $81 million Sphere 3D acquisition in May, five months after Overland acquired Tandberg Data.

Thanks largely to Tandberg’s RDX removable disk technology, Overland increased its annual revenue 37 percent over last year to $65.7 million. Its revenue for last quarter doubled compared to the same quarter in 2013, from $12.1 million to $24.2 million.

Overland’s disk system revenue shot up to $11.5 million last quarter from $2.5 million over the previous year, including $8.2 million of RDX products and $2.4 million from its SnapServer networked storage platform. For the year, Overland recorded $14.4 million of revenue from RDX removable drives. That makes up most of its $17.5 million increase in revenue over 2013.

Overland began selling Tandberg products last January.

Overland isn’t doing nearly as well with its legacy products. SnapServer annual revenue went from $9 million to $9.5 million, and tape automation revenue declined from $16.8 million to $14.2 million.

CEO Eric Kelly said Overland is on track to become a $100 million revenue company, “which we expect to provide a clear path to profitability.”

The losses continue for now. Overland dropped $7.4 million last quarter and $22.9 million for the year. The annual loss was worse than 2013 when Overland lost $19.6 million. Overland finished its fiscal year with $12.1 million in cash and short-term investment compared to $8.8 million last year.

“We have made significant progress in transforming the company,” Overland CEO Kelly said.

More transformation is ahead. Kelly said the target date to close the pending Sphere 3D merger is the end of October. As announced in May, Sphere 3D will pay $81 million for Overland.

That deal brings a new set of questions for Overland. How does Sphere 3D – which had only $2.75 million in revenue and lost $3.4 million over the first six months of this year – justify paying $81 million for another company that has a long history of losses? And what is the status of Sphere 3D’s Glassware 2.0 virtual desktop software, which has been in development for years with little to show.

Kelly said Glassware technology has been deployed in “multiple customer environments,” and Overland and Sphere 3D are ready to extend its availability. The companies announced a deal in May with PACS vendor Novarad to sell Glassware on SnapServer DX2 appliances with Sphere 3D’s Desktop Cloud Orchestrator management software. Novarad is marketing that product as NovaGlass. However, when pressed on the earnings call, Kelly could not say if Novarad has any customers for NovaGlass yet or is still testing the product.

“If you have a radiologist out there that wants to talk to them, I’d be more than happy to make that introduction,” he said.

It will take a lot of introductions to pull Sphere 3D/Overland out of the red.

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