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Quantum (OTC: QMCO) Investor Presentation August 2019

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Today’s Quantum: Leaner, More Product and Technology Focused, Poised for Growth and Improving Earnings Power

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Quantum (OTC: QMCO) Investor Presentation August 2019

  1. 1. 1© 2019 Quantum Corporation | Company Confidential OTC: QMCO Investor Presentation August 2019
  2. 2. 2© 2019 Quantum Corporation | Company Confidential Disclaimer This presentation may include “forward-looking” statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Quantum advises caution in reliance on forward-looking statements. Forward-looking statements include, without limitation, any projections of revenue, margins, expenses, Adjusted EBITDA, Adjusted Net Income, cash flows, or other financial items; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; and the expected timing of relisting our securities on a national exchange. All forward-looking statements are based on information available to Quantum on the date hereof. These statements involve known and unknown risks, uncertainties and other factors that may cause Quantum’s actual results to differ materially from those implied by the forward-looking statement, including unexpected changes in the Company’s business. More detailed information about these risk factors, and additional risk factors, are set forth in Quantum’s periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled “Risk Factors,” in Quantum’s Quarterly Report on Form 10-Q and Annual Report on Form 10-K as filed with the Securities and Exchange Commission. Quantum expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Also note that in this presentation the Company will be discussing non-GAAP financial information. We provide this information as a supplement to information prepared in accordance with Accounting Principles Generally Accepted in the United States or GAAP. You can find a reconciliation of these metrics to the reported GAAP results in the reconciliation table provided in the Company's earnings release furnished on Form 8-K, dated August 6, 2019.
  3. 3. 3© 2019 Quantum Corporation | Company Confidential Today’s Quantum: Leaner, More Product- and Technology- Focused, Poised for Growth and Improving Earnings Power Current guidance of fiscal 2020 Adjusted EBITDA of a range of $50 - 55 MILLION For the second fiscal quarter, management expects revenues in the range of $99 - 105 MILLIONElimination of OVER $70 MILLION in annualized operating, service, and supply chain expenses
  4. 4. 4© 2019 Quantum Corporation | Company Confidential New Leadership with Proven Ability to Execute Jamie Lerner Quantum Chairman and CEO Mike Dodson Quantum CFO Liz King Quantum CRO New Team • Reconstituted Board of Directors to include significant shareholders; directed at corporate accountability and operational improvement • Since January 2018, replaced almost three- fourths of prior management • Recruited over 10 new executives from the best organizations worldwide including CEO, CFO, CRO, CAO, CIO, VP Supply Chain, General Counsel, Corporate Controller and Director of Internal Audit • Previous experience includes HPE, IBM, Oracle, Seagate, Ernst & Young, Cisco, Pivot3, and more
  5. 5. 5© 2019 Quantum Corporation | Company Confidential Quantum Overview – Who We Are Years storing and protecting data Years of expertise working with video in Hollywood Active support contracts around the world World-class service and support organization 36+ 20+ 30,000+ 24/7/365 Blockbusters are created… On Quantum. Critical Infrastructure is protected… On Quantum. The world’s biggest brands are built… On Quantum. Exploration and adventure happens… On Quantum. Your favorite sports are captured… On Quantum. Our planet is studied… On Quantum. Autonomous vehicles are developed… On Quantum. Leading Enterprises are protected... On Quantum. Nations are secured… On Quantum. Breakthroughs are discovered… On Quantum. Hyperscaler archives... On Quantum. Your memories are preserved... On Quantum.
  6. 6. 6© 2019 Quantum Corporation | Company Confidential Video and Image Data is Everywhere By 2025, This Digital Content Will be >80% of the Data on the Planet Source: IDC Datasphere reports
  7. 7. 7© 2019 Quantum Corporation | Company Confidential Video is Not Well Supported by Traditional Enterprise Products 50x larger than average corp database Traditional Data Services Compression, dedupe, snaps, clones, replication, backup… …don’t work or less effective Costly to move to the cloud Petabytes of data $$$ Complex to search and analyze
  8. 8. 8© 2019 Quantum Corporation | Company Confidential Video and Image Data Sets Drive a Common Set of Requirements CONTENT IS CAPTURED, CREATED, UPLOADED CONTENT IS CATALOGED, WORKED ON, & ANALYZED CONTENT IS PRESERVED AND PROTECTED FOR FUTURE USE RETAIN CONTENT IS FINISHED AND DISTRIBUTED 1 2 3 4
  9. 9. 9© 2019 Quantum Corporation | Company Confidential Quantum’s Portfolio Uniquely Delivers on These Requirements Edge Storage Ruggedized removable storage designed for fast ingest and easy upload/offload. High-Performance Video Platforms Fastest streaming performance on the planet, IP (Internet Protocol) & SAN (Storage Area Network) support, specifically designed for video & rich media use cases. Archive Storage and Cloud Managed Services Lowest-cost, massively scalable long-term storage of video and rich media content and assets, on prem and in the cloud. Use Cases: Autonomous vehicle design, rolling stock surveillance capture, military. Use Cases: High-performance storage for video and rich media workflows, hyperconverged surveillance systems. Use Cases: Digital media archives for broadcast and post, petabyte-scale archives for HPC (High-Performance Computing)/research rich media, exa-scale cloud archives. CONTENT IS CAPTURED, CREATED, UPLOADED CONTENT IS CATALOGED, WORKED ON, & ANALYZED CONTENT IS PRESERVED AND PROTECTED FOR FUTURE USE RETAIN CONTENT IS FINISHED AND DISTRIBUTED 1 2 3 4
  10. 10. 10© 2019 Quantum Corporation | Company Confidential A More Product- and Technology-Focused Quantum VS-Series for Surveillance Recording StorNext File System Provides Fastest Streaming Performance R-Series Ruggedized Storage For Edge Data Collection F-Series NVMe Appliance For Video Editing, Rendering Cloud-Based Analytics Software Enables Distributed Cloud Services Quantum Cold Storage Software and Services Distributed Cloud Services to Drive Recurring Services Revenue
  11. 11. 11© 2019 Quantum Corporation | Company Confidential Where We Are Going Right-sized expense structure Poised for growth via unique products and technology Software-defined enables recurring services and software revenue Stabilized Financials Significant y-y EBITDA Growth Sustained Profitable Growth Based on Video and Image Markets
  12. 12. 12© 2019 Quantum Corporation | Company Confidential QUANTUM. MAKING THE WORLD… HAPPIER SAFER SMARTER
  13. 13. 13© 2019 Quantum Corporation | Company Confidential OTC: QMCO Financial Details August 2019
  14. 14. 14© 2019 Quantum Corporation | Company Confidential Financial Overview First Fiscal Quarter 2020 ended June 30, 2019 – Revenue of $105.6, down 2% from $107.5 in the prior year quarter – Adjusted EBITDA increased 82% to $13.1, compared to $7.2 in the prior year quarter Full Year Fiscal 2019 ended March 31, 2019 – Revenue of $402.6, down 8% from $437.7 in the prior year – Adjusted EBITDA reached $32.5, compared to (-$4.5) in the prior year Balance Sheet and Liquidity at June 30, 2019 – $10.8 in cash and cash equivalents – $164 in total debt outstanding – Undrawn revolving credit facility of $45 ($ in millions) ($ in millions)
  15. 15. 15© 2019 Quantum Corporation | Company Confidential Financial Highlights - First Quarter Fiscal 2020 Three Months Ended June 30 Increase (Decrease)2019 2018 Revenue $105.6 $107.5 (2%) Gross Margin 43% 43% - Total Operating Expenses $43.1 $50.7 (15%) Net Loss $(3.8) $(7.5) 49% EPS $(0.11) $(0.21) 48% Non-recurring Charges $8.3 $9.8 (15%) Adjusted Net Income $4.4 $2.3 91% Adjusted EPS $0.11 $0.06 83% Adjusted EBITDA $13.1 $7.2 82% ($ in millions, except per share amounts)
  16. 16. 16© 2019 Quantum Corporation | Company Confidential Restructuring Eliminated Annualized Spending by $70 Million Operating expenses reduced by $60 million Cost of sales reduced by $10 million 95% of the cost reductions were in three categories: – Just over 75% represented headcount related costs – Just over 10% represented marketing programs – Just under 10% represented travel related expenses All spending reductions exclude non-recurring costs
  17. 17. 17© 2019 Quantum Corporation | Company Confidential Balance Sheet Highlights Cash and cash equivalents = $11 – Excluding $5 million in restricted cash required under the Credit Agreements Total debt outstanding = $164 – Revolving credit facility that was not drawn down at either March 31, 2019 or June 30, 2019 DSO Improvement – Lower DSO by 19 days from the prior quarter end June 30, 2019 March 31, 2019 Cash & Cash Equivalents $11 $11 Accounts Receivable $67 $87 DSO 57 76 Inventories $44 $38 Payables DPO 60 54 Accounts Payable $40 $37 Deferred Revenues $120 $127 Total Debt Outstanding $164 $165 ($ in millions)
  18. 18. 18© 2019 Quantum Corporation | Company Confidential Bank Covenant Summary – Quarter Ended June 30, 2019 Covenant PNC Target PIMCO Target Q1 FY2020 EBITDA (TTM) || Greater than → $31 $28 $41 Net Leverage Ratio || Less than → 4.80 5.50 3.69 Total Leverage Ratio || Less than → 5.30 N/A 3.98 Fixed Charge Ratio || Greater than → 0.97 0.85 1.46 Total Liquidity || Greater than → $10.0 $10.0 $36 ($ in millions)
  19. 19. 19© 2019 Quantum Corporation | Company Confidential FY 2020 Projected Cash Flows Interest Payments $22 Capital Expenditures Debt Payments Income Tax Payments Working Capital Supporting Growth FY 2020 Adj. EBITDA Guidance ($ in millions) $8 $2 $2 $18.5 $52.5 (mid-point of range)
  20. 20. 20© 2019 Quantum Corporation | Company Confidential Financial Guidance Outlook Second Quarter Fiscal 2020 Full-Year Fiscal 2020 – Adjusted EBITDA – range of $50 - $55 ▪ 54% to 69% increase over the prior year – For the remaining three quarters of fiscal 2020 revenues to increase by $15 to $30 over the same period of the prior year ▪ 6% to 10% compared to same period in the prior year ▪ Mid-point of guidance is a 5% increase over the prior year Revenues $99 - $105 Adjusted Net Income ¹ $2 - $4 Adjusted EBITDA ¹ $10 - $12 ¹ Adjusted Net Income and Adjusted EBITDA Guidance Excludes approximately $3 million in forecasted non-recurring charges ($ in millions)
  21. 21. 21© 2019 Quantum Corporation | Company Confidential GAAP to Non-GAAP Reconciliations
  22. 22. 22© 2019 Quantum Corporation | Company Confidential © 2019 Quantum Corporation. Company Confidential. Forward-looking information is based upon multiple assumptions and uncertainties, does not necessarily represent the company’s outlook and is for planning purposes only.

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