Quantum, which has delayed its fourth quarter and full fiscal 2025 results because of accounting problems, now says that the previous quarter’s revenues were wrongly stated as a 1 percent Y/Y rise to $72.6 million. It should have been a 4.5 percent fall to $68.7 million.
This is revealed in an August 8, 2025, SEC filing by CFO Lewis Moorehead who stated that the existing Q3 FY 2025 financial statements “should no longer be relied upon.” Quantum’s audit committee and management team found that there were “service and subscription revenue inconsistencies” in the way revenue was recognized as well as necessary standalone selling price adjustments that needed to be made, “resulting in an adjustment to revenue.”
Quantum has long suffered standalone selling price problems, it now appearing a seemingly endemic issue.
The company expects that the resulting restatement: “will result in a decrease of approximately $3.9 million in revenue and a similar decrease in net loss from operations,” which could increase the GAAP net loss for the period from the existing $71.4 million; possibly, we think, to $75.3 million if the $3.9 million revenue decrease is reflected 1 for 1 in the net loss number.
The company has, it says, deficiencies or material weaknesses in its internal controls and: “the Company’s full assessment of the effectiveness of its internal control over financial reporting will be described in more detail in the Annual Report on Form 10-K for the year ended March 31, 2025.” There is no date set for this report to be filed with the SEC.
The SEC filing states that there were also adjustments to the fiscal quarters ended June 30, 2024 and September 30, 2024. However, these adjustments were not material and are not required to be restated.
Grant Thornton LLP is the Company’s independent registered accounting firm and was appointed on August 18, 2023, for the fiscal year ending March 31, 2024 (FY 2024).
Comment
Quantum has had a board makeover and CEO/CFO and CRO change in the last three months, and a round of layoffs, as it tries to recover from years of losses and declining revenues. The new board and exec team think the company can grow its revenues and return to health.
Investors sold shares when they found out about the latest snafu, with the peak August 8 stock price of $8.02 falling to the current $7.42 after recovering from a $7.02 low point on August 12. The investors may be thinking the board and exec team’s turnaround plan is not credible until, and unless, it can demonstrate believable and transparent financial reporting.
This latest financial reporting blunder makes the new board and exec team’s job even more difficult. The reputation of the company will fall lower and its debtors may have to reassess Quantum’s value. Perhaps, they may think, the firm has more total value if component parts are sold off and it exits from unprofitable business sectors. The independent accounting firm may now be facing an exit as well.
