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Should You Buy, Hold or Sell Quantum Stock Before Q2 Earnings Release?
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Key Takeaways
Quantum expects Q2 revenues of $82 million, up nearly 31% year over year, with adjusted EPS of 12 cents.
Strong ActiveScale adoption and tape storage demand could boost QMCO, but supply shortages may limit growth.
QMCO shares surged 115.5% in a year, while higher costs and component shortages pose profitability risks.
Quantum Corporation (QMCO - Free Report) will report second-quarter fiscal 2027 results on Nov. 9, after market close.
The Zacks Consensus Estimate for earnings for the to-be-reported quarter is pegged at 13 cents. Analysts have not revised their estimates for QMCO’s bottom line over the past 60 days. The consensus estimate for total revenues is pinned at $82 million, up from $62.7 million reported in the same period last year.
What Our Model Predicts for QMCO
Our proven model predicts an earnings beat for QMCO 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. 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 +4.00% and a Zacks Rank #3.
Quantum’s second-quarter fiscal 2027 performance is expected to have benefited from strong enterprise demand for its ActiveScale and tape storage solutions. On the last earnings call, management highlighted that demand remained strong across the business, supported by increasing data volumes and the need to optimize storage costs, improve infrastructure efficiency and reduce power consumption. The company reported first-quarter revenues of $80.8 million, up 25.7% year over year, driven by strong demand for ActiveScale and tape storage solutions. Management expects continued strong bookings and a substantial backlog to support second-quarter performance.
For the fiscal second quarter, Quantum expects revenues of $82 million, plus or minus $2 million, implying nearly 31% year-over-year growth at the midpoint. Non-GAAP adjusted operating expenses are projected at $27 million, plus or minus $1 million. The company anticipates non-GAAP adjusted earnings of 12 cents per share, plus or minus 10 cents, and adjusted EBITDA of $6 million (+/- $1 million).
In the last reported quarter, management highlighted increasing traction among large enterprise customers, with a significant rise in deals valued at more than $1 million during the first quarter, the majority exceeding $3 million. The company also secured a significant renewal and expansion of an ActiveScale deployment with a leading European biometrics institution in the first quarter. In the last reported quarter, management stated that customers typically expand deployments after experiencing the solution’s scalability, resilience and power efficiency. Continued customer expansions and larger enterprise deals could have supported second-quarter business momentum.
Quantum Corporation Price, Consensus and EPS Surprise
Strength in tape storage solutions is another potential growth driver. Management highlighted increasing adoption of tape technologies as organizations seek to reduce storage costs, lower power consumption and strengthen cyber resilience. Recent LTO shipment data showed capacity shipments increasing 15% sequentially, while Quantum’s tape opportunity funnel reached its highest level in years. The company also secured a significant hyperscaler deployment in APAC centered on its Scalar i7 tape library, valued at well over eight figures. Growing enterprise and hyperscaler opportunities could have supported demand during the quarter.
Regional demand and service revenues are likely to have provided additional support. In the first quarter, revenues in the Americas increased more than 20% sequentially, while APAC revenues rose more than 50%, reflecting strong demand across enterprise and cloud-oriented environments. Service revenues increased approximately 10% sequentially, indicating stabilization after several years of decline. Continued strength in tape-related royalty revenues, supported by broader industry adoption, could also have boosted second-quarter performance.
However, supply-chain constraints are expected to have remained a significant headwind. Management highlighted persistent shortages of tape drives and certain disk drives, with customer demand continuing to exceed Quantum’s fulfillment capabilities. Although supply conditions are expected to improve over the year, management had not observed a meaningful improvement in tape drive availability as of August. Consequently, shipment limitations could have restricted revenue growth despite strong bookings and increasing backlog.
Second-quarter gross margins are expected to have benefited from stronger pricing, disciplined cost execution and structural improvements. Management anticipates year-over-year gross margin improvement following the first quarter’s 39.3% GAAP gross margin. However, component shortages, pricing volatility and uncertainty surrounding large deals remain overhang.
Higher operating expenses are also likely to have weighed on profitability. The anticipated sequential increase reflects higher sales commissions and accelerated R&D hiring. Consequently, adjusted EBITDA is projected to decline from $8 million in the first quarter to approximately $6 million. Nevertheless, the elimination of outstanding debt is expected to keep interest expenses minimal, providing some support to second-quarter net income.
Image Source: Zacks Investment Research
Key Developments
On Sept. 8, 2026, Quantum introduced Quantum Autonomous Data Management (ADM), a new solution aimed at helping organizations better understand their data, reduce storage costs, lower risk and improve operational efficiency. The launch comes as organizations manage rapidly increasing data volumes across traditional applications, AI, analytics and digital transformation initiatives.
QMCO Stock Performance
Quantum’s shares have surged 115.5% over the past year, outperforming the Zacks Computer & Technology sector’s growth of 6.8% and the S&P 500 Composite’s return of 10.8%. However, the stock has underperformed the Zacks Computer- Storage Devices industry’s growth of 129% over the same period.
Image Source: Zacks Investment Research
The company has also outperformed its peers, Dell Technologies Inc. (DELL - Free Report) , NetApp, Inc. (NTAP - Free Report) and International Business Machines Corporation (IBM - Free Report) . DELL and NTAP have gained 177.3% and 64.9%, respectively, while IBM declined 18.5% in the same time frame.
QMCO's Valuation
QMCO’s shares are trading at a forward 12-month price/sales ratio of 1.85, lower than the industry’s 2.12.
Image Source: Zacks Investment Research
In comparison, DELL, NTAP and IBM trade at a forward 12-month P/E of 1.17X, 4.42X and 3.24X, respectively.
What to Do With QMCO Stock Before Q2 Earnings?
Strong demand, ActiveScale adoption and tape storage opportunities might have supported Quantum’s second-quarter performance, while supply shortages, component pricing volatility and higher operating expenses remain key challenges.
Existing investors may consider holding the stock, while prospective investors could wait for a more attractive entry point.
View the Zacks #1 Rank List
Image: Bigstock
Should You Buy, Hold or Sell Quantum Stock Before Q2 Earnings Release?
Key Takeaways
Quantum Corporation (QMCO - Free Report) will report second-quarter fiscal 2027 results on Nov. 9, after market close.
The Zacks Consensus Estimate for earnings for the to-be-reported quarter is pegged at 13 cents. Analysts have not revised their estimates for QMCO’s bottom line over the past 60 days. The consensus estimate for total revenues is pinned at $82 million, up from $62.7 million reported in the same period last year.
What Our Model Predicts for QMCO
Our proven model predicts an earnings beat for QMCO 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. 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 +4.00% and a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors to Note Ahead of QMCO’s Q2 Earnings
Quantum’s second-quarter fiscal 2027 performance is expected to have benefited from strong enterprise demand for its ActiveScale and tape storage solutions. On the last earnings call, management highlighted that demand remained strong across the business, supported by increasing data volumes and the need to optimize storage costs, improve infrastructure efficiency and reduce power consumption. The company reported first-quarter revenues of $80.8 million, up 25.7% year over year, driven by strong demand for ActiveScale and tape storage solutions. Management expects continued strong bookings and a substantial backlog to support second-quarter performance.
For the fiscal second quarter, Quantum expects revenues of $82 million, plus or minus $2 million, implying nearly 31% year-over-year growth at the midpoint. Non-GAAP adjusted operating expenses are projected at $27 million, plus or minus $1 million. The company anticipates non-GAAP adjusted earnings of 12 cents per share, plus or minus 10 cents, and adjusted EBITDA of $6 million (+/- $1 million).
In the last reported quarter, management highlighted increasing traction among large enterprise customers, with a significant rise in deals valued at more than $1 million during the first quarter, the majority exceeding $3 million. The company also secured a significant renewal and expansion of an ActiveScale deployment with a leading European biometrics institution in the first quarter. In the last reported quarter, management stated that customers typically expand deployments after experiencing the solution’s scalability, resilience and power efficiency. Continued customer expansions and larger enterprise deals could have supported second-quarter business momentum.
Quantum Corporation Price, Consensus and EPS Surprise
Quantum Corporation price-consensus-eps-surprise-chart | Quantum Corporation Quote
Strength in tape storage solutions is another potential growth driver. Management highlighted increasing adoption of tape technologies as organizations seek to reduce storage costs, lower power consumption and strengthen cyber resilience. Recent LTO shipment data showed capacity shipments increasing 15% sequentially, while Quantum’s tape opportunity funnel reached its highest level in years. The company also secured a significant hyperscaler deployment in APAC centered on its Scalar i7 tape library, valued at well over eight figures. Growing enterprise and hyperscaler opportunities could have supported demand during the quarter.
Regional demand and service revenues are likely to have provided additional support. In the first quarter, revenues in the Americas increased more than 20% sequentially, while APAC revenues rose more than 50%, reflecting strong demand across enterprise and cloud-oriented environments. Service revenues increased approximately 10% sequentially, indicating stabilization after several years of decline. Continued strength in tape-related royalty revenues, supported by broader industry adoption, could also have boosted second-quarter performance.
However, supply-chain constraints are expected to have remained a significant headwind. Management highlighted persistent shortages of tape drives and certain disk drives, with customer demand continuing to exceed Quantum’s fulfillment capabilities. Although supply conditions are expected to improve over the year, management had not observed a meaningful improvement in tape drive availability as of August. Consequently, shipment limitations could have restricted revenue growth despite strong bookings and increasing backlog.
Second-quarter gross margins are expected to have benefited from stronger pricing, disciplined cost execution and structural improvements. Management anticipates year-over-year gross margin improvement following the first quarter’s 39.3% GAAP gross margin. However, component shortages, pricing volatility and uncertainty surrounding large deals remain overhang.
Higher operating expenses are also likely to have weighed on profitability. The anticipated sequential increase reflects higher sales commissions and accelerated R&D hiring. Consequently, adjusted EBITDA is projected to decline from $8 million in the first quarter to approximately $6 million. Nevertheless, the elimination of outstanding debt is expected to keep interest expenses minimal, providing some support to second-quarter net income.
Image Source: Zacks Investment Research
Key Developments
On Sept. 8, 2026, Quantum introduced Quantum Autonomous Data Management (ADM), a new solution aimed at helping organizations better understand their data, reduce storage costs, lower risk and improve operational efficiency. The launch comes as organizations manage rapidly increasing data volumes across traditional applications, AI, analytics and digital transformation initiatives.
QMCO Stock Performance
Quantum’s shares have surged 115.5% over the past year, outperforming the Zacks Computer & Technology sector’s growth of 6.8% and the S&P 500 Composite’s return of 10.8%. However, the stock has underperformed the Zacks Computer- Storage Devices industry’s growth of 129% over the same period.
Image Source: Zacks Investment Research
The company has also outperformed its peers, Dell Technologies Inc. (DELL - Free Report) , NetApp, Inc. (NTAP - Free Report) and International Business Machines Corporation (IBM - Free Report) . DELL and NTAP have gained 177.3% and 64.9%, respectively, while IBM declined 18.5% in the same time frame.
QMCO's Valuation
QMCO’s shares are trading at a forward 12-month price/sales ratio of 1.85, lower than the industry’s 2.12.
Image Source: Zacks Investment Research
In comparison, DELL, NTAP and IBM trade at a forward 12-month P/E of 1.17X, 4.42X and 3.24X, respectively.
What to Do With QMCO Stock Before Q2 Earnings?
Strong demand, ActiveScale adoption and tape storage opportunities might have supported Quantum’s second-quarter performance, while supply shortages, component pricing volatility and higher operating expenses remain key challenges.
Existing investors may consider holding the stock, while prospective investors could wait for a more attractive entry point.