Quantum (QMCO) 8 Aug 232024 Q1 Earnings call transcript

Welcome to Quantum's Fiscal First Quarter 2024 Financial Results Conference Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to Brian Cabrera, Quantum's Chief Administrative Officer. Thank you.

begin. may You

thank discuss and I'm joining conference today's Cabrera, Good First you Quarter to Officer. Quantum's Chief results. Fiscal call Quantum's morning Administrative for XXXX Brian financial

Chairman first and our Speaking We'll the from open to then Jamie is Lerner, CFO. CEO; by Ken today followed Gianella, questions analysts. call our

expenses, comments viewed call other margins, refer today our involve to of as historical EBITDA, as and statements of risks than including adjusted fact include projections forward-looking uncertainties factors. of These and known income, or Some be net may during the should forward-looking, any we unknown or statements statements cash statements. financial other adjusted All performance revenue, flows topics. risk operational

our Risk factors may cause our actual from forecast. results materially to differ

our whether to Securities descriptions not forward-looking events these except detailed do We or we information, they Exchange For in of information, applicable course, we under Risk refer the a are more additional or and XX-Qs of as Factors please are with and future otherwise, law. about our as filed the section intend new factors once risk Commission. XX-K statements provide by result required to and update alter the issued,

of our release to in release. that reconciliations include certain include non-GAAP the GAAP We press we management financial items our and statements GAAP during note Please press and definitions information today's and in make call will non-GAAP measures.

call to over Jamie? and the our like Jamie would turn I Now Lerner. to CEO, Chairman

us. for first announced results Brian, Thank our Earlier for you XXXX. today, fiscal and you, we joining thank all quarter our

X. Slide to Turning

in and non-GAAP 'XX from of the million. adjusted with gross the margin a is $XX.X We quarter. results XX.X% Here finished overview EBITDA $X.X of of QX revenue, million brief

point global EBITDA improved as well the to XXX-basis over below I profitability. improvements our to improvement Xx address year-over-year margins to as came cost on revenue in continue well in adjusted as in XX% plan above driving deliver gross and reduction a a helped sequential we non-GAAP moment, expectations, efficiency initiatives will While which of focus

I taking improved through our adjusted described quarter and the will deliver an we EBITDA we in as and are Ken year-over-year the annual walk actions guidance. to

to turning operational Several share revenue falling insights. our impacted factors like would of some X, to short Now I Slide expectations.

that over not partners until million of in the in sales do media steady finalize our traditionally last by anticipated the for lower quarters, week XX First, has 'XX. traditionally the last from been and than quarter came QX $X.X

in unseen revealed the capacity into higher-than-anticipated in Hyperscale vertical the by excess was marketplace. weakness shortfall Investigation the there market compounded

some delays. were primary anticipated, Hyperscale materialized saw that than impacting by orders end-of-quarter quarter's we impacted unexpected deliveries Next, some revenue. and And this later finally, secondary

and efficiencies Turning non-GAAP with to to services anticipate sales business. device manufacturing margins. and the We improved mix combined media on of in reduced lower-margin to improved XX.X% in Hyperscale continue based and operational the gross and improvements We manufacturing operational near term. the services, both through

and revenue XX% XXX-basis improving recurring QX As hear revenue. $XX.X XX% growth anticipate are ARR you also we in million. QX year-over-year to from grew margin gross Fiscal subscription continued our [indiscernible] in another point 'XX. to by with will improvement Ken, Margins annual

hardware We end year accelerated the a by stable calendar availability will ARR continue that sales this from continue of model. anticipate to of rotation general our more onetime Myriad subscription to

of key improving progress part our our full sell result logistics along a footprint. from products. our This self-help are of the of self-help a transformation These and ability and leveraging Next, productivity, reducing we significant proactive improvements manufacturing in actions, our global with discretionary initiatives includes to as initiatives. have spend portfolio our made

fiscal benefits in timing implemented the was first these actions late positive We QX, expect quarter. the in to actions given of from continued see some

quarter a to cost actions expenses result, $XX deeper efficiencies our we million a of drive year profitability. continue footprint, anticipate to increase and the non-GAAP operating operational leverage opportunities rest As global find we to to for improve begin the below as to trend our

I are and we address taking. Finally, current the actions market want environment to

continues public the drivers this workloads The the into in be cloud, to of due certain are of trend to systems. heading in economic seeing indications prior robust will indications to we emerging this on-premise of year, budgets are environment, IT environment many, cloud be the exponential data Hyperscale repatriation outlook there including While as storage as growth that not slowdown years. tighter of and fiscal

factors end, the our X to quarters. partners Hyperscale largest QX a next were in fiscal potential 'XX our outlook the customer extend these us 'XX. QX led that 'XX of have orders Hyperscale to pausing with All fiscal they quarter into our QX for subsequent all Thus, the to also cautious informed capacity additional

revenue and While XXXX anticipate impact our only to revenue $XX orders million QX greater in pause XX% they are from in deploying recent solution still our on-hand as inventory, their represented of new our in we this fiscal customer than our this was most over concentration 'XX. outlook

million. 'XX While outlook we developments fiscal $XX year our anticipated. million in outlook, initial our 'XX that this for estimate this and additional by year slowdown will than was have And full recent Hyperscale to we a Hyperscale impact fiscal these initial will the $XX anticipated slowdowns year potential deeper impact

media for sales anticipate 'XX device QX and also levels term. near to In addition, the as similar this we impact slowdown will

outlook While and outlook. a original of a million more financial impact the low our of color $XX impact, on in media from anticipate will give 'XX full revenue his very year approximately have slowdown you the fiscal Ken will update. guidance we our margin impact

our drop disappointing, potential to opportunities the the we increase and secondary end-to-end we large both market primary this non-Hyperscale see XX% in the solutions. to In encouraged are QX, improvement is in for year-over-year. by While XX% Hyperscale

being portfolio. offers Additional now end-to-end as complete at explored customers these opening opportunities and are a Quantum

continue We anticipate half to the into this trend XXXX. back of

QX and more outlook our Ken? results to I'd turn financial in Ken to walk 'XX like detail. to Now it over through

X% overview to our for of financial results provide quarter. year-over-year turn million, fiscal XX% and sequentially. approximately Please the Revenue $XX.X of Jamie. of and XXXX first quarter the you, first Thank a Slide in an I'll X, decrease was

discussed, lower Jamie bookings. media, anticipated on softer devices Hyperscale quarter than the was delays demand and As for and for later revenue

Even lower revenue, profitability significantly our with has overall improved. the

Our in to actions with pricing increased product margins and along improving points manufacturing our on a services, and proactive XX.X% basis mix basis. actions GAAP gross XXX GAAP

to quarter the We expect continue the performance in was operational this improved Adjusted year. EBITDA first through $XXX,XXX.

$XXX,XXX year better was cost ongoing benefit gross represented the in and improvement over compared of an I by performance our improvement quarter. with initial the prior driven discussed first This This the Xx reduction initiatives. margin

I'll this the in of year-over-year quarter's revenue X. Slide to a breakdown turning results trends. Now provide

our Services revenue last the traditional storage million, systems storage quarter, $XX.X revenue down our to this subscription. consists services of license breaks XX% approximately and perpetual XX% and Similar subscription was delivery. year-over-year secondary primary Primary performance and presentation and only does include slide on both of sequentially. Quantum down of not our from

in has impact to the bookings installed Late work due and To of the significant base quarter in labor decrease. our were the entertainment not media product, driver primary which this QX entertainment serving note, StorNext an see stoppages. industry XXXX ongoing did the industry

potential does second Our not are impacts, in we factor outlook QX modest improve. does 'XX anticipating situation the half labor for headwinds if and

decreased total revenue. revenue increased $XX.X Secondary of to and sequentially XX% XX% storage million year-over-year approximately systems XX% or

sequentially the increase, year-over-year discussed, waning the from driver this were down capacity while of cloud Hyperscale our Jamie on was As vertical customers needs providers.

declines fiscal our the Looking older $XX.X down lines. year-over-year, XX% anticipate in by in to product to We service level the revenue life later year. million, first our services this end was revenue begin at business, tape approximately off quarter of driven on service

in devices Next, revenue decreased media XX% was $X.X approximately XX% down to year-over-year million. sequentially and and

demand. last media's rate essentially decline near driven its sharp the capacity QX, market years, prior of media In the over million few has $XX total by quarter an while run dip remained unanticipated a from was for in flat

the With LTO the quarter generation combined of reductions we outlook year, capacity our in recent million forward. to $X with approximately later going a this online are Hyperscale be shifting coming newer

approximately in And and lower finally, the quarter million. royalties were totaled $X

annualized of revenue current $XX We anticipate to stabilize or million. around approximately million $XX an rate continue royalty to levels to

Moving was of for to or a with recurring update subscription on Total X. combined I XX% recurring revenue at margin revenue our to and total million revenue quarter ARR gross annual want businesses XX%. being an provide of the $XX.X Slide the approximately metrics. our annual approximately

improve ARR maximizing As total to aim by customers consistently to and our Quantum service opportunities a both globally. company, we our our partners

growth portion of in continues to 'XX, business the ARR the Our increased total approximately on year-over-year $XX.X million. approximately our subscription sequentially first we and transformation subscription making quarter XX% In are efforts. to our X% the demonstrate QX progress

renewal with customers as cycle, over on the rate see strong implementation of we XXX% progress a note, our subscription are first renewal enter are 'XX. subscription we of seeing to encouraged of XX% very offering near Also, we subscription. new by Finally, continue we with in QX our

let's Slide quarter Now first X, turning review to GAAP our results.

GAAP margin year. the of share a the million quarter or $XX.X last compared for revenue a to loss of first XX.X% loss GAAP first quarter of $XX.X $X.XX per compared quarter XX.X% quarter per XXXX. was was the the of share in or same in first $X.XX in gross net million loss to

for improvement, Now year-over-year. turning over Non-GAAP to XX.X%, both non-GAAP XX the and representing for quarter sequentially first gross margin point XXX Slide metrics. basis was an

EBITDA Non-GAAP share, $X.XX below and $XX.X down first loss improve $XXX,XXX, And net our $XX from which quarter Non-GAAP in or and million improved ability revenue first cost was both adjusted in shows last adjusted flat quarter, despite for million coming year-over-year. our profile operating the quarter the sequentially expenses finally, $X.X to to first our million operational were quarter. loss a per $XX.X million the expectations. from year-over-year the down

global higher-margin to profitability focus team's more and solutions. effort improving center EBITDA initiatives cost subscription-based and will in on reduction driving Our end-to-end on our sales our total continue

in We continue fiscal sequential in revenue a on our profitability base deliver to will improvements year XXXX. even year-over-year anticipate and lower efforts

the million end. an XX debt, Slide cash at Cash, liquidity revolvers, the funding in debt during $XX.X were includes approximately quarter and the we $XXX.X and to turn quarter between term quarter split secured our please cash of additional flexibility. overview million. debt with of was conjunction and greater restricted equivalents at which end Outstanding of million, for $XX first Now covenant in

drive quarter metrics being in million. flow net $XXX.X remain position we was towards the fiscal year capital cash cash end, working positive overall and our of conversion XXXX. second as on the debt improving company's We At half focused

for second quarter Turning fiscal XXXX. XX. company's now I'll the Slide the to year review guidance and

by second or First, recent quarter the impacted total largest $XX in we plus million, anticipate million. significantly This the news to customer. $X revenue was outlook be our from minus

to based on share the per XX.X minus We net be non-GAAP shares $X.XX negative $X.XX loss share an adjusted expect outstanding. for second per plus estimated or quarter million

improvement This be million. for second is and significantly the gross on expected to $XX EBITDA be $X non-GAAP margins Adjusted be is approximately approximately anticipated to expense to by lower quarter XX% revenue approximately million. driven operating

for with million, of Hyperscale the now to and XXXX, in terms be drop minus or outlook $XX media the unanticipated both In expect million. year our $XXX revenue verticals, full we plus

work range industry. also into impact consideration of takes second half potential the This the in updated entertainment prolonged stoppage

While new self-help product mix outlook low in the million for $XX anticipate year. with approximately of our was After we full dropped year gross and at the it our efforts, primarily our verticals full margins. improvement gross revenue margins XX% midpoint, evaluating

adjusted and add $XX to a turn plus million. a to of progress anticipated year is of guidance, for This XX. of EBITDA approximately $X some driver our Slide range full To color the minus our please or with million big

to to global self-help improving footprint on efficiencies, return driving and continues reduction our focused cost operational leveraging programs executing mix, revenue initiatives. Our profitability be

All while the are of the we actively was of Unanticipated underway, and work prolonged strong and Even in to demonstrating progress. controls outlook manufacturing the making across declines stoppage. discretionary our strong run ability revenue spend of these Quantum programs operation original cost a and our a year in headwinds, and implementing entertainment media Hyperscale, proportion industry our full operations. are disciplined is these impact with service

self-help of taking programs second our shape better the half are than and QX year fiscal XXXX, beyond anticipated. Looking

the we with opportunities information, to continue to our outlook the call to throughout we find for year. back outlook as latest improve I'll that, customers will risk-adjusted and With the partners Jamie have to with this closing While hand our we progress remarks. now revenue work this

Thanks, Ken.

Quantum's hand our and remarks want we I of our near-term over view to prepared demand end Before questions, to the focus. with go-forward it

Ken expecting and were said, and we certain Hyperscale velocity the than faster regional reduction at softening cloud of customers, a harder as While initial in is enterprise projections. our the

impact This revenue will our in have term. a significant the on Hyperscale near

quarters. of this a couple However, there will is an normalize expectation in that

vertical, Hyperscale in overall weakness the While the solutions right trends disappointed direction. I of pointing Quantum am are near-term in our demand for the

the APAC with economic have China. beginning data they U.S. partner from need they Quantum. days, partners input, and at on The unstructured the trips doing to Based recent are in get Southeast past accelerating businesses. are event customers in long-term customers Asia, and storage to our can I customer their India for and And XX see that improvement cost-effective, management visited

year-on-year We including secondary the QX solutions, our these and proof the primary for XX% with our are growth almost seeing non-Hyperscale points 'XX in higher-than-anticipated the back half of outlook year. in solutions in pipeline

continue and CIOs turning the both workloads, ways the the existing to in find budgets to term, operate are to their While to under tighter Quantum cost on-prem optimize cloud. they near in of

momentum over are seeing traction, next and and up us it quarters. this to few to is significant end-to-end capture the Quantum's solutions on-premise cloud

in to Quantum's industrial solutions video, cases and leverage ML tape, in turnkey and use disk for ActiveScale any between Myriad, the and ML enterprise flash, ready that storage As to are manage biotechnology enterprise. give early adopters sized cloud on-premise mass companies and and service offerings and models, way cost-effective technology-based AI AI both

and improving and proof look remains need effectively results Quantum enterprise's of quarters stakeholders, to up dedicated to TCO the Quantum on-premise at and and the let's the all unstructured cloud forward for beneficiary the and lowest cost between of financial the open terabyte. and that, come. data to enabler an it With we more per focused remains both manage operational providing its Operator? points to both questions. our over months for

[Operator Instructions].

question first George Iwanyc from with & Oppenheimer Co. is Our

quarter? into of kind the way And be and still last second careful confident of half building building fairly quarter visibility Jamie, do the guidance. the trends fourth of you with a give about you're is you Or year? with bit built on full being the rebound there us third into to a now some comments to can your seasonality year on appears the that guidance fourth the there'll from that expect outlook, the the perspective It you're quarter? your improve

And following: series Yes. second just coming There's confidence for give working those And been quarters of us not things improve to are working seasonality. a those about it's half. on initiatives X and we've things that the been we've that the together are which we're and is had in probably moving XX% our biggest the improvement best to margins. is result that And confidence from the call single the takeaway into and margin have forecast I we've quarter. margins XX.X%, a quarters our this X next

for in So in different we've earnings a that puts very us position than some time. quite been

thing together The And our very American profitable segments. XX% federal we're XX% American revenues North enterprise North we have very in our to Those second coming those pockets. and most a margin-rich are into that's is good in business. increase visibility seeing

getting where you those back it margins turn we're get that the we painful we're to get per actually when margins, revenue the somewhat into making that look from to you cost-cutting adjusted are $X look million we we're making million the the perspective, to. change in but changes, XX%. mix with to So now it's the at when at a back at combined Once need XX% EBITDA XX% range initiatives, XX% range quarter we that sales $X to

we're so making And those changes.

the need. pipeline have we We

clear half pretty the we've that that and $XX we have that the we're of projected. not making the smooth deals need. It's in a visibility visibility have million line, but we year achieve We of we'll transformation. in meet the And EBITDA back that the

Ken, one for you. question

looking in Just the at kind range the at can the we mix? look XX%, a have comes Hyperscale gross Hyperscale you as margins back when we into of model do normalization, that out

how would me be tell how asking mix project that to to would I it Well, you're that down. much in pull Hyperscale you mean,

type as Our we've Hyperscale before, XX% to margin business, of XX% anywhere said range clip. a from publicly that can gross

So perspective a XX%. of gross give depending have come from it. the amount we weight margin be the between dollars to that, that's upon But somewhere range into to XX% you'd the on tends that

is Our B. with from Craig Securities. next question Riley Ellis

and I prepared clarifying and your Ken, hoping to the detailed with transparency you. much to in start deck I question the want commentary. for thank very for very just say a you all was

And down that X fiscal million were bin X out variables is revenue clear the from our very look 'XX I variance. the Jamie you that. about there's prior. So just of view you those $XX or million both could and impact relative of revenue was XX% impacting as we $XX hoping each at

million midpoint. million midpoint $XX mean, know pure and that roughly look going $XX focused from for million $XXX the I the of simple I mean, at portion down. were I $XX your Well, it to But -- point. Hyperscale $XX I million on. around a That's we at for it we of that of is us, is million were

the so While the going the into conservative volatility in we quickly very this minds disappointing. of velocity our and were out year, dropping was

around is bucket at the are XX% once just X% low look to George, lower of -- both margin, margin. of you that's I really get the factor these told When XX% that's it. second Hyperscale, media The rebates. Again, as piece, in the portion or media you

So the $XX depending the probably it, to recovers $XX million media out side million of upon another there. how market that's potentially

X real of portion at Hyperscale it. the buckets we're the and the big media looking is that So

of then your wanted I really comments Ken. prepared remarks. follow with to Jamie, And That's helpful, in just up one your

that's we last there You part regions, had big in commented numerous economically and intensity. your and enterprise U.S. shift Europe is, that signs face-to-face the up in The picked and bit month a down of over on time. in the of a I being a with know question customers was spending

mostly the to benefits Are mix the are and moving a the to systems. of towards and spending What on latter? AI seeing customers about a there is other on former There's lot of Quantum? cloud spending chatter at Or and far that more generative you Hyperscale risk also thus been Hyperscale of enterprises, intensity?

Yes.

spoke a as amounts purpose type Hyperscale in for the Autonomous usually data work of time, about and proving routinely did more of data. collecting some enterprises have companies our exabyte we For seeing performing AI/ML more of capabilities. large we the an very of long I am work. driving And analytics

more of I'm for data petabyte paying this type step, the talk XXX to for will, data that make and going and do more the intellectual to basic they're they that's XXX they're if you if their years, And cloud at companies idea of to about seeing efficient. that monthly XX keeping. just keep or that to just say store data provider XXX service years, provider a of some economically fee probably they not exabytes look

coming companies house a for that having conversations for biggest house Quantum we're by to conversation save infrastructure around engaging in in cold how efficiently by many to we now single data and That how build capabilities analytics about our more those storage we Quantum building us capabilities years, discussions XX, to own data or money data to want XXX do If engage going this is do and is they XX the do this. our is them themselves. ActiveScale storing help with

other their can they seeing also AI/ML as more efficiently. very we're a StorNext performing they're AI for so high-performance own the workloads and hardware performant only us either viable having and because or about around are if provider is a going on to The Myriad, are they that, systems and that runs, our but start both provider ML perform the high-speed on very not of cloud platforms of conversations that F-Series our these also cost-effective

the cloud on less need. an So the the AI hardware, workload can faster perform time you less the you

efficiently about engaging AI we perform conversations others. And workloads in how so more we're than can of lot a

good. So the have been conversations

been since been Our I've it's pipeline largest is here. the

that confident of more that's largest of our disappointment capabilities have frustration some half we the want though more and we're And projects the back even happen that we're made. this with to what rapid we're our of the our and seeing engaging the feeling pipeline sales. cloud more and see the hoped the cloud with. in pretty But is obviously, and feeling to why starting enterprise And year translate people time where -- current because for the some develop quarter there's changes had customers we're will about is capability. And

anticipated to the ARR you with numbers, it, to that were thinking can shift I think, create we that and stability on help would as eventually, movement. add out pleased But we the we're the to years Myriad offset talked X products more services. it to happening recurring Jamie that happen, shift this of on is and and some about, we have we would on uptick that that, X I'd before can get as long-term also revenue capabilities that's but from our very annual would Craig, online going side when that of see our be

really a That's Ken. guys. to helpful, just follow-up that, And then

the $XXX of would the given maybe in mid-teens rebound for annual to guide revenue in the would back the XQ seem year So million the business sequentially. that and fiscal imply digits half mid-single

you but Can out? per as talk just rebound you're specific playing not half, overall quarter, are I some to guidance risks see the the what in the look you you at guidance? the that's linearity And about bigger back do of implied the providing how know linearity?

confidence think doing proof We've right to that's North that earlier, I there mean the to team those the exactly been we sales of team it's mean, -- that the in over Jamie these the now. be, a pieces the American visibility I over for we're when going getting sequentially. connections and now, the going No. in points have about there as you in investing efforts lot close right, Fed. have said that well and out. group And a they year we're

has numbers marketplaces. second confidence give in basic the it, and the market associated those conversion pipeline greater said, the us with start the future half Jamie the When company in the you as associated that while pipeline with growth Object thinking and and looking than Storage about in had just a

with Our from next is question Street. Lake Martinuzzi Eric

guys said when it QX. X the for revisit you gave know Yes. the the you was linearity. I I to June outlook wanted QX,

with patterns GOs? So I'm enterprise, regard or primary storage side. on to specifically And talking -- government delays, did you any and booking either the see the maybe verticals,

Yes.

one So longer did some in. cycles. I'll was late tend had sales was with it. I We start that delay to the are us the in the our They video surveillance going be it side. to that confidence pretty side in. be Unfortunately, with got These significant just within to fulfill come bookings were of quarter to elements come fully able those mean,

some delayed As I there through the before, my media, said Hyperscale, video there. the of the quarter. and notes said, deliveries of I then surprise obviously, And delay looking was surveillance in the I'm you look just as at and was here, -- end at

Okay. would June? thought where be for you government And it was

we track big were Yes. that you anticipated to that that We're quarter trailing government be. the across quarter see is in we Traditionally, for board. this the what on

of QX. -- kind -- step-up pretty QX looking fiscal large for at that's in we're So business a -- the for our government this

and debt a the liquidity. regarding Okay. And question then

be this XX. to referring Slide would So

to in getting in does that prior outlook? October, flow given Or positive you the the time is half. still targeting recast that November to frame, have about of know talked full conversations, year move You second accurate? our I in cash right the the been

year. quarters, get at, we right, to confident still right? though. feel that were talking be We're in that we we outlook out, We just conservative with not solid of moved fiscal this these Obviously, where to November. I slightly at as Yes. at maybe can levels, come months it we were fairly October, to prior moves the through,

it a some of few levers the of spending. that for free getting lever With come in get over in, we already us conservative on give that what's to decisions be we've really flexibility will disciplined spend, we're be cash flow of to there. this days our be back positive. some more obviously, to CapEx which was portion last more pulling The biggest And made CapEx the going the lot were to knowledge going to

with Our Markets. question is Capital next Nehal from Chokshi Northland

-- well, both Ken of you.

in you of respect vertical year, composition that federal that American confidence fiscal Myriad? [indiscernible] the seeing North especially to enterprise pipeline, your gives and that with half the of you're back So what's in product the the

number right right, Myriad or we're Well, indifferent, is no wrong that in giving there that now.

on have, primary surveillance that So focused the storage products elements. today. around we truck on And along focusing in storage the purely that's and our we other really cold off and ActiveScale ActiveScale composing. with StorNext our really That confidence other are video what's where the we're that comes elements is

we've be of just cautious taken media how entertainment the the labor the back to industry. of StorNext, some year depending half goes elements The out there in the unrest the and upon of within

million to work stoppage. and media. cautious device with mentioned, remainder respect Okay. Slide basically the takedown and additional up being M&E But $XX the it the I $XX XX. $XX being lot. you really it But appreciate million helpful. a like or with especially as just And million I bring explanation really It's of some does hyperscaler StorNext the questions, you're being in with context of your

be but that's lever is well, And element positive there I so an that as is guess to offsetting that got conservatism? a

elements we the business Yes, discussed before, ActiveScale Yes, -- the is. than anticipated. we showing stronger are from as there the and governmental we portions

with associated the in So business. that offsets that's the of primary some

it. Got

mix the the a EBITDA margin implies to healthy Okay. then margin you've $X range, impact $XX EBITDA been on versus the XX% rich up. takedown, million And of which that EBITDA net would putting relative of to like what million in XX%

contention that device with hyperscaler the is so low-margin reconcile the business. that the And basically

question, I be you. heard didn't get with I but it, honest the to So

me and the in the Jamie we business out this looking top fallout doing Hyperscale, always and on sat business. we the we brought was board, just looking as on with gravy media what at of were When team of with the with So were the healthy more our effective and self-help Hyperscale our operating with about lot was and in with global how end-of-service it life. services declines footprint, of margins, year, with improve a particularly we next this with at our being do get can look margins, efficient the our how operational the we

A lot throughout was self-help. based improvement the of always margin on our year

how our at themes year-over-year. confident Now those and and to we of knew our also of this is looking rest Both of to -- into side up happening. going our that X those plus ActiveScale business was felt are going we're pick traction primary cold storage things the all that year

Those All on. we this again, thing lost I the the other -- into associated the we and that that, was with dropout We're have path dropout and still of I to ones X execute quarter gravy mean, going as top. elements the levers, pulling were to. Hyperscale -- said, handles we the velocity the days were of the on The we're media business. knowledge and elements, see talking the the here,

what some optimistic coming towards Hyperscale as the the the to start of we'll is, back half a excess potential that back back of we're in inventory cautiously half some towards of year. there's in the start and getting So this we through of work business, for year, the

like hand for are Jamie Lerner to further closing There questions this at would time. over any comment. no floor I to the back

Thanks, right. to for dig call. All ourselves everyone, spend wants more us, Ken Thanks, I If time anyone make today's will attending available. and with deeper, everyone.

today's concludes conference. This

you at your disconnect lines time. this may your participation. for Thank You