Here's How to Play Quantum Stock Before Q3 Earnings Release

Quantum Corporation QMCO will report its third-quarter fiscal 2025 results on Thursday, after the market close.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The Zacks Consensus Estimate for earnings in the to-be-reported quarter is pegged at a loss of 70 cents per share, improved by 22 cents in the past 60 days. The consensus estimate for total revenues is pinned at $72 million.Image Source: Zacks Investment ResearchQMCO missed the Zacks Consensus Estimate for earnings in the last reported quarter by 82%.What Our Model Predicts for QMCO’s Q3Our proven model does not conclusively predict an earnings beat for Quantum this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.QMCO has an Earnings ESP of 0.00% and a Zacks Rank #2.Quantum Corporation Stock Price and EPS Surprise Quantum Corporation price-eps-surprise | Quantum Corporation QuoteFactors to Focus Ahead of QMCO’s Q3 EarningsStrong demand for its Myriad and ActiveScale products is likely to have cushioned the top-line performance in the fiscal third quarter. In December 2024, Quantum extended support for the NVIDIA GPUDirect Storage capability by introducing an advanced parallel file system client for its Myriad all-flash file system.The innovation also offers on-the-fly deployment of client nodes across diverse platforms, including support for NVIDIA Grace Hopper with Grace ARM-based architectures. The new client enables seamless integration of powerful GPU nodes into Myriad clusters, tailored for demanding workloads such as AI/machine learning model training, high-performance computing visualization and video rendering.Strong demand for other data protection offerings also bodes well. In December 2024, Quantum announced the availability of the Scalar i7 RAPTOR, an advanced tape storage solution optimized for AI and cloud applications. It is the most scalable and dense tape system designed for hyperscale customers, MSPs and large enterprises.In November 2024, Quantum unveiled its latest innovation — the DXi9200 — to address threats associated with rapidly evolving cyberattacks, including ransomware. Being the newest addition to the successful DXi9000 Series, this hybrid data protection appliance is tailored for scalability, security and efficiency in backup and recovery solutions, with advanced capabilities to protect and empower enterprises.Also, the transition toward subscription-based selling is a part of Quantum’s broader strategy to diversify its revenue mix. In the last reported quarter, Subscription ARR increased 28% year over year and 5% sequentially to $19.6 million. Over 88% of new unit sales in the quarter were subscription-based, added QMCO.Focus on cost efficiency is likely to have cushioned margin performance in the reported quarter. In the last reported quarter, non-GAAP operating expenses were down 9% year over year. QMCO expects $40 million in savings by the end of fiscal 2025 compared with fiscal 2023. The company is guiding for positive free cash flow in the second half of fiscal 2025.Image Source: Zacks Investment ResearchFor the third quarter of fiscal 2025, the company is forecasting revenue of $72 million (+/-2 million). Non-GAAP operating expense is projected to be $31 million (+/-$1 million) with a non-GAAP adjusted EBITDA of $2 million. Non-GAAP adjusted net loss per share is expected to be 75 cents, +/- 5 cents per share.Lower revenue contribution from primary storage solutions remains a concern. In the last earnings call, management noted that the revenue decline was caused by the revenue mix shifting toward lower-margin products. This remains concerning for Quantum.Operational headwinds related to the supply chain are likely to have acted as additional concerns.QMCO Stock SoarsQMCO shares have skyrocketed 203.8% in the past six months. It has significantly outpaced the 1.6% gain of its Computer Storage Devices Industry and the 14.2% rally of the Zacks S&P 500 composite.QMCO Stock Price PerformanceImage Source: Zacks Investment ResearchThe increase is also better than some of its notable peers in the same space. NetApp NTAP and Pure Storage PSTG have surged 0.1% and 24.1%, respectively. On the other hand, Netlist NLST has declined 45.5% in the same time frame.QMCO’s Investment ConsiderationsQMCO’s multifaceted strategy, focused on driving growth through innovative products, operational efficiency, and a subscription-based selling model, bodes well.QMCO continues to invest in product innovation to capitalize on high-growth trends in AI, data protection and cloud storage. Products like the DXi T-Series All-Flash data protection appliance and the Scalar i7 RAPTOR, which are designed for AI data lakes, underscore the company’s efforts in driving top line expansion. The transition to recurring revenue models enhances the stability of the company’s financial performance, as subscription revenues provide predictability.However, challenges in transitioning to subscription selling, high debt levels and ongoing operational headwinds related to supply chain disruptions continue to affect top-line performance.Here’s Why You Should Buy QMCO Before EarningsImproving demand for Myriad and ActiveScale solutions, a shift toward subscription selling and extensive cost reductions make QMCO an attractive investment opportunity.QMCO currently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NetApp, Inc. (NTAP): Free Stock Analysis Report Pure Storage, Inc. (PSTG): Free Stock Analysis Report Netlist, Inc. (NLST): Free Stock Analysis Report Quantum Corporation (QMCO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks