Back on Nasdaq: Quantum exits de-listed underworld

Quantum is returning to listed public company status, courtesy of the Nasdaq exchange, ending an 18 month period of accounting purgatory following wrongful revenue recognition practises by prior management.

The company revealed these practices in an SEC filing in September 2018 and promptly entered a period of limbo as it struggled to identify what had happened and why, and then fix the problems.

There was a board-level investigation, ejection from the New York stock exchange, investor class actions, and a sequence of five CEO changes helped demonstrate its entire future was at risk. 

These culminated in Jamie Lerner becoming chairman, president and CEO, getting full control, in June 2018 and he has since righted the quaking Quantum ship and put it back on course.

Jamie Lerner: Quantum chairman, president and CEO.

Corrected financial statements were filed in August last year for its fy2015, fy2016 and fy2017 periods, and they revealed losses. A refinancing exercise, hindered by the lack of accredited financial statements, provided capital. 

Much-needed new management came in. Some fresh engineering talent augmented the product team which managed to deliver new products. It returned to positive EBITDA status after 4 years of negativity.

StorNext lifeline

The core StorNext product suite, covering video file storage, management and workflows, is Quantum’s lifeline. Customers have stuck with it, being unable to get similar technology from any other supplier, and the product has been extended.

Lerner told Blocks & Files that it was an 18-month epic trek: “We had to get leaner. We had to show out technical prowess and the ability to invent instead of slopping out the same old products. … Our biggest customers told us what we needed to do.”

That was something in and around video, which is appropriate as video is set to account for more a large proportion of stored data in a few years’ time.

According to Cisco: “Globally, IP video traffic will be 82 per cent of all IP traffic (both business and consumer) by 2022, up from 75 per cent in 2017. Global IP video traffic will grow four-fold from 2017 to 2022, a CAGR of 29 per cent. Internet video traffic will grow fourfold from 2017 to 2022, a CAGR of 33 per cent.”

Concerning the StorNext products, Lerner said: ”There were wonderful tech assets but we had to get the mud off.” 

Getting the mud off

NVMe support was added with the F2000 to give StorNext a high-speed file system. That system went from concept to first customer ship in 6 months; Lerner saying: “When that happened I knew we could do it.”

Video surveillance products were added and the automotive driver assistance (ADAS) market entered. The StorNext user interface was updated with web-serving APIs.

Even the tape products were given an update with stronger anti-ransomware technology.

There’s more to do, with Lerner saying: “I wouldn’t say we’re done. We have another 3 or 4 years work ahead of us. We went after the low-hanging fruit.”

Our view

The company is making its products manageable from the cloud and has a major StorNext release coming, which is being developed to work better in a hybrid on-premises, public cloud world. 

That workflow-integrated video and like-video tiered file storage and management software suite represents Quantum’s crown jewels.

The Nasdaq relisting is a significant stage and Quantum is determined to use it to get growing again.