Quantum delays filing latest results amid financial reporting issues

Quantum is delaying its fy2024 second quarter results filing while it recalculates its standalone selling prices.

Standalone selling prices are the numbers used by accountants when assessing a bundle of products and services to provide a value for the individual components. This can be complicated by bundle-level discounts and by component products and services having a range of individual selling prices. A US Accounting Standards Codification (ASC) Topic 606 covers the subject. 

Quantum  filed a Form 12b-25 (notification of late filing) yesterday, saying it would postpone its fiscal 2024 second quarter earnings announcement and conference call, which are typically held in the second week of November. It will announce the quarter’s earnings when the recalculation is complete, but no date has been provided for this.

Quantum said its current method of accounting was adopted in August 2019 after the Company finalized a restatement of its financial statements. The restatement was needed to correct a multi-quarter problem of premature revenue recognition.

The Company has applied that method consistently since then but has decided that it is appropriate to re-evaluate its methodology for accounting under ASC 606. It has not said why it is appropriate to re-examine its standalone selling price methodology.

Quantum hired a new CFO in January 2023 when Ken Gianella joined. He is said to have vast business expertise.

As a stop gap to reassure investors, Quantum is providing its unaudited cash and long-term debt balances as of September 30, 2023:

  • Cash and cash equivalents were $25.6 million, compared to $25.7 million as of September 30, 2022.
  • Outstanding term loan debt was $87.9 million, compared to $77.2 million as of September 30, 2022. Outstanding borrowings under the revolving credit facility was $21.5 million, compared to $21.5 million as of September 30, 2022.
  • Total interest expense for the three-month period ended September 30, 2023 was $3.9 million, compared to $2.7 million for the same period a year ago.

Quantum has worked with its lenders under its Term Loan Credit Agreement and Amended and Restated Revolving Credit Agreement.  The lenders have granted waivers with respect to Quantum’s financials for the second quarter of fiscal 2024 while the Company re-evaluates its accounting methodology.