Despite posting a loss in the fourth quarter of fiscal 2014, shares of Quantum Corp. ( QTM ) have been trending upward since May 7. The company's loss per share of 2 cents matched the Zacks Consensus Estimate and was narrower than a loss of 4 cents per share reported in the year-ago quarter. The adjusted loss per share excludes amortization of intangible assets and restructuring charges but includes stock-based compensation expense.
Total revenue for the fourth quarter was $127.9 million, down 8.6% on a year-over-year basis but was marginally above the Zacks Consensus Estimate of $127.0 million. The year-on-year decrease was primarily due to lower sales of tape automation and disk systems.
Revenue from StorNext and Lattus scale-out storage solutions increased 9% year-over-year, driven by a 50% increase in North America revenue. Year over year, Product revenues declined 14.2% to $79.4 million; Royalty revenues grew 5.2% to $10.9 million and Service revenues grew 1.9% to $37.6 million.
Adjusted gross margin in the quarter was 41.5%, up from 41.4% in the year-ago quarter due to better cost management.
Adjusted operating loss came in at $3.4million versus a loss of $7.1 million reported in the year-ago quarter. The narrower year over year loss was primarily due to lower cost, which was offset by lower revenue base. The company's total operating expenses decreased 8.2% on a year-over-year basis. Research and development expenses decreased 11.6%, sales and marketing expenses dipped 15.1% and general administrative expenses also fell 7.3%.
Adjusted net loss was $5.3 million or 2 cents per share compared with net loss of $9.4 million or 4 cents in the year-ago quarter. Adjusted net loss excluded one-time items but included stock-based compensation expense.
Quantum generated $35.5 million in operating cash, up from $15.5 million in the prior quarter. Cash, cash equivalents and restricted cash were $99.1 million versus $80.1.0 million in the previous quarter. There was no long-term debt.
For the first quarter of fiscal 2015, management expects revenues to be in the range of $125.0-$130.0 million (mid-point $127.5 million). The Zacks Consensus Estimate is pegged at $128.0 million. This apart, the company expects non-GAAP gross margin in the range of 44.0%-45.0%. The company expects non-GAAP operating expenses to be approximately $54.0 million.
For fiscal 2015, management expects revenues to be in the range of $540.0-$550.0 million (mid-point $545.0 million). The Zacks Consensus Estimate is pegged at $540.0 million. The company expects non-GAAP gross margin in the range of 45.0%-46.0%. Non-GAAP operating expenses are expected to be in the range of $215.0 million to $220.0million.
Quantum's fourth quarter results were modest with the bottom line matching the Zacks Consensus Estimate and the top line beating the same by a slight margin. However, year-over-year comparisons were unfavorable. The year-on-year decrease was primarily due to lower sales of tape automation and disk systems. Quantum's first quarter revenue guidance was also weak.
Nonetheless, new product launches and go-to-market strategies should act as growth catalysts, given the increasing demand for data security and big data management.
However, the company competes with bellweathers such as International Business Machines Corporation ( IBM ), Hewlett-Packard Company ( HPQ ) and Oracle Corporation ( ORCL ) who are slowly tightening their grip on the market. Moreover, a tepid IT spending environment and Quantum's broad European exposure may temper its growth prospects to some extent.
Currently, Quantum has a Zacks Rank #3 (Hold).