U.S. Markets closed
  • S&P 500

    4,662.85
    +3.82 (+0.08%)
     
  • Dow 30

    35,911.81
    -201.79 (-0.56%)
     
  • Nasdaq

    14,893.75
    +86.95 (+0.59%)
     
  • Russell 2000

    2,162.46
    +3.02 (+0.14%)
     
  • Crude Oil

    84.35
    +0.53 (+0.63%)
     
  • Gold

    1,815.60
    -0.90 (-0.05%)
     
  • Silver

    22.91
    -0.01 (-0.03%)
     
  • EUR/USD

    1.1413
    -0.0003 (-0.0228%)
     
  • 10-Yr Bond

    1.7720
    +0.0610 (+3.57%)
     
  • Vix

    19.19
    -1.12 (-5.51%)
     
  • GBP/USD

    1.3671
    -0.0009 (-0.0629%)
     
  • USD/JPY

    114.4570
    +0.2570 (+0.2250%)
     
  • BTC-USD

    42,945.07
    -133.59 (-0.31%)
     
  • CMC Crypto 200

    1,034.33
    +8.60 (+0.84%)
     
  • FTSE 100

    7,542.95
    -20.90 (-0.28%)
     
  • Nikkei 225

    28,307.22
    +182.94 (+0.65%)
     

FalconStor Software Announces First Quarter 2021 Results Including 20% Total Revenue Growth, GAAP Net Income After Tax of $425,248

  • Oops!
    Something went wrong.
    Please try again later.
·11 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Strong First Quarter Marked by Robust Product Revenue Growth, and Significant Customer Expansions, Net Income, New Customer Sales, and New Product Expansion

  • 104% year-over-year increase in product revenue

  • 185% year-over-year increase in new customer billings

  • $425,248 in net income, versus a $719,840 net loss in Q1 2020

FalconStor Software, Inc. (OTCQB: FALC), a trusted data protection leader modernizing backup and archival solutions for the multi-cloud world, today announced financial results for its first quarter of fiscal year 2021, which ended on March 31, 2021, recording solid product revenue growth, significant customer expansions and continuing profitability of $425,248.

"We continue to make good progress against our strategic plans to reinvent FalconStor, enhance the value we deliver to our customers, and innovate within the cloud-based data protection market," said Todd Brooks, FalconStor CEO. "During the first quarter, we continued to stabilize growth as we delivered a 20% year-over-year increase in total revenue. Our growth was driven by a 104% year-over-year increase in product revenue, which continues to reflect our shift to a subscription model and growth in new customer wins. Over the next year, we expect our year-over-year revenue growth to continue to stabilize as our sales pipeline becomes more predictable, and we expand our markets."

"Migration to the cloud, data center rationalization and infrastructure optimization are top priorities for enterprise CIOs in the post-pandemic world, and FalconStor plays a vital role in each," added Brooks. "As the economy continues to recover, we will continue to work with enterprises and managed service providers to modernize backup and archival solutions software for the cloud era, reducing the cost and complexity of leveraging the cloud while improving essential data portability and security, including protection against ransomware attacks."

First Quarter 2021 Financial Results

  • Product Revenue: 104% product revenue growth to $2.1 million, compared to $1.05 million in the first quarter of fiscal year 2020

  • New Customer Billings: $3.2 million, compared to $1.1 million in first quarter of fiscal year 2020

  • Total Revenue: $3.8 million, compared to $3.2 million in first quarter of fiscal year 2020

  • Total Cost of Revenue: $0.6 million, compared to $0.5 million in first quarter of fiscal year 2020

  • Total Operating Expenses: $3.2 million, compared to $3.0 million in first quarter of fiscal year 2020

  • GAAP Net Income (Loss): $0.4 million, compared to $(0.7) million in first quarter of fiscal year 2020

  • Ending Cash: $2.0 million, compared to $1.0 million in first quarter of fiscal year 2020

First Quarter 2021 Business Highlights

  • Delivered updates to our next-generation long-term data retention and recovery technology in StorSafe, built with a bridge to all industry-leading public clouds for long-term archival optimization, including AWS, Microsoft Azure, IBM Cloud, and Wasabi

  • Continued to demonstrate enterprise scalability of our product, including expansion to 3 petabytes of data across 8 nodes and multiple data centers for a large government institution

  • Continued our win trajectory in IBM environments, specifically IBM I and AS/400 system implementations

  • Continued to deliver additional multi-tenant capabilities to enable managed service providers to better serve their clients

Conference Call and Webcast Information

WHO: Todd Brooks, Chief Executive Officer, FalconStor and Brad Wolfe, Chief Financial Officer, FalconStor

WHEN: Wednesday, May 5, 2021, 4:00 P.M. Central Time

To register for our earnings call, please click the following link:

FALCONSTOR FIRST QUARTER 2021 FINANCIAL TELECONFERENCE AND PRESENTATION

As an alternative, you can copy and paste the following link into your web browser to register:

https://attendee.gotowebinar.com/register/7579497014553976332

Conference Call:
Please dial the following if you would like to interact with and ask questions to FalconStor hosts:
Toll Free: 1-866-901-6455
Access Code: 867-930-041

Non-GAAP Financial Measures

The non-GAAP financial measures used in this press release are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The Company’s management refers to these non-GAAP financial measures in making operating decisions because they provide meaningful supplemental information regarding the Company’s operating performance. In addition, these non-GAAP financial measures facilitate management’s internal comparisons to the Company’s historical operating results and comparisons to competitors’ operating results. We include these non-GAAP financial measures (which should be viewed as a supplement to, and not a substitute for, their comparable GAAP measures) in this press release because we believe they are useful to investors in allowing for greater transparency into the supplemental information used by management in its financial and operational decision-making. The non-GAAP financial measures exclude (i) restructuring costs, (ii) effects of our Series A redeemable convertible preferred stock, and (iii) non-cash stock-based compensation charges and any potential tax effects. For a reconciliation of our GAAP and non-GAAP financial results, please refer to our reconciliation of GAAP to Non-GAAP financial measures presented in this release.

About FalconStor Software

FalconStor is a data protection technology company enabling enterprises to modernize their data backup and archival operations across multiple sites and public clouds. We deliver increased data security and provide fast recovery from ransomware attacks, while driving down an enterprise’s data storage footprint by up to 90%. As an established technology leader with 47 patents and patent applications, we have over an exabyte of data under management and offer products that are used by more than 600 enterprise customers. Our products are offered through and supported by a worldwide network of leading service providers, systems integrators, resellers, managed services providers ("MSPs") and original equipment manufacturers ("OEMs"). To learn more, visit www.falconstor.com and stay connected with us on YouTube, Twitter, and LinkedIn.

FalconStor and FalconStor Software are trademarks or registered trademarks of FalconStor Software, Inc., in the U.S. and other countries. All other company and product names contained herein may be trademarks of their respective holders.

Links to websites or pages controlled by parties other than FalconStor are provided for the reader's convenience and information only. FalconStor does not incorporate into this release the information found at those links nor does FalconStor represent or warrant that any information found at those links is complete or accurate. Use of information obtained by following these links is at the reader's own risk.

FalconStor Software, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2021

December 31, 2020

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

2,020,989

$

1,920,656

Accounts receivable, net

2,954,033

2,836,571

Prepaid expenses and other current assets

2,063,111

1,837,596

Contract assets, net

380,119

254,483

Inventory

15,061

15,275

Total current assets

7,433,313

6,864,581

Property and equipment, net

196,630

197,020

Operating lease right-of-use assets

202,495

536,272

Deferred tax assets, net

312,342

330,552

Software development costs, net

17,639

19,278

Other assets, net

862,515

863,964

Goodwill

4,150,339

4,150,339

Other intangible assets, net

84,052

100,134

Contract assets

188,119

343,934

Total assets

$

13,447,444

$

13,406,074

Liabilities and Stockholders' Deficit

Current liabilities:

Accounts payable

$

917,570

$

453,791

Accrued expenses

2,374,705

2,293,765

Operating lease liabilities

235,962

665,074

Short-term loan, net of debt issuance costs and discounts

3,396,568

3,320,863

Deferred revenue, net

4,151,083

4,603,270

Total current liabilities

11,075,888

11,336,763

Other long-term liabilities

698,323

703,889

Notes payable, net

754,000

Operating lease liabilities

Deferred tax liabilities, net

520,905

513,027

Deferred revenue, net

2,303,675

1,765,859

Total liabilities

14,598,791

15,073,538

Commitments and contingencies

Series A redeemable convertible preferred stock

13,415,006

12,940,722

Total stockholders' deficit

(14,566,353

)

(14,608,186

)

Total liabilities and stockholders' deficit

$

13,447,444

$

13,406,074

FalconStor Software, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended March 31,

2021

2020

Revenue:

Product revenue

$

2,139,729

$

1,048,963

Support and services revenue

1,688,597

2,131,224

Total revenue

3,828,326

3,180,187

Cost of revenue:

Product

222,834

139,460

Support and service

426,173

407,920

Total cost of revenue

649,007

547,380

Gross profit

$

3,179,319

$

2,632,807

Operating expenses:

Research and development costs

659,940

674,924

Selling and marketing

1,396,640

981,191

General and administrative

837,867

1,093,169

Restructuring costs

302,313

287,460

Total operating expenses

3,196,760

3,036,744

Operating income (loss)

(17,441

)

(403,937

)

Gain on debt extinguishment

754,000

Interest and other expense

(266,695

)

(245,839

)

Income (loss) before income taxes

469,864

(649,776

)

Income tax expense (benefit)

44,616

70,064

Net income (loss)

$

425,248

$

(719,840

)

Less: Accrual of Series A redeemable convertible preferred stock dividends

277,170

285,760

Less: Accretion to redemption value of Series A redeemable convertible preferred stock

197,114

26,090

Net income (loss) attributable to common stockholders

$

(49,036

)

$

(1,031,690

)

Basic net income (loss) per share attributable to common stockholders

$

(0.01

)

$

(0.17

)

Diluted net income (loss) per share attributable to common stockholders

$

(0.01

)

$

(0.17

)

Weighted average basic shares outstanding

5,949,463

5,919,643

Weighted average diluted shares outstanding

5,949,463

5,919,643

FalconStor Software, Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Measures

(Unaudited)

Three Months Ended March 31,

2021

2020

GAAP income (loss) from operations

$

(17,441

)

$

(403,937

)

Non-cash stock option expense (1)

$

4,471

$

4,510

Restructuring costs (3)

302,313

287,460

Non-GAAP income (loss) from operations

$

289,343

$

(111,967

)

GAAP net income (loss) attributable to common stockholders

$

(49,036

)

$

(1,031,690

)

Non-cash stock option expense, net of income taxes (2)

4,471

4,510

Restructuring costs (3)

302,313

287,460

Effects of Series A redeemable convertible preferred stock (4)

474,284

311,850

Non-GAAP net income (loss) attributable to common stockholders

$

732,032

$

(427,870

)

GAAP gross margin

83

%

83

%

Non-cash stock option expense (1)

0

%

0

%

Non-GAAP gross margin

83

%

83

%

GAAP gross margin - Product

90

%

87

%

Non-cash stock option expense (1)

0

%

0

%

Non-GAAP gross margin - Product

90

%

87

%

GAAP gross margin - Support and Service

75

%

81

%

Non-cash stock option expense (1)

0

%

0

%

Non-GAAP gross margin - Support and Service

75

%

81

%

GAAP operating margin

%

(13

%)

Non-cash stock option expense (1)

%

%

Restructuring costs (3)

8

%

9

%

Non-GAAP operating margin

8

%

(4

%)

GAAP Basic EPS

$

(0.01

)

$

(0.17

)

Non-cash stock option expense, net of income taxes (2)

0.00

0.00

Restructuring costs (3)

0.05

0.05

Effects of Series A redeemable convertible preferred stock (4)

0.08

0.05

Non-GAAP Basic EPS

$

0.12

$

(0.07

)

GAAP Diluted EPS

$

(0.01

)

$

(0.17

)

Non-cash stock option expense, net of income taxes (2)

0.00

0.00

Restructuring costs (3)

0.05

0.05

Effects of Series A redeemable convertible preferred stock (4)

0.08

0.05

Non-GAAP Diluted EPS

$

0.12

$

(0.07

)

Weighted average basic shares outstanding (GAAP and Non-GAAP)

5,949,463

5,919,643

Weighted average diluted shares outstanding (GAAP)

5,949,463

5,919,643

Weighted average diluted shares outstanding (Non-GAAP)

5,972,288

5,919,643

Footnotes:

(1)

Represents non-cash, stock-based compensation charges as follows:

Three Months Ended March 31,

2021

2020

Cost of revenue - Product

$

227

$

Cost of revenue - Support and Service

181

103

Research and development costs

428

Selling and marketing

2,677

184

General and administrative

1,386

3,795

Total non-cash stock based compensation expense

$

4,471

$

4,510

(2)

Represents the effects of non-cash stock-based compensation expense recognized, net of related income tax effects. For the three months ended March 31, 2021 and 2020, the tax expense for both GAAP and Non-GAAP basis approximate the same amount.

(3)

Represents restructuring costs which were incurred during each respective period presented.

(4)

Represents the effects of the accretion to redemption value of the Series A redeemable convertible preferred stock, accrual of Series A redeemable convertible preferred stock dividends and deemed dividend on Series A redeemable convertible preferred stock.

(5)

Represents the impact of an increase in diluted shares outstanding resulting from Non-GAAP adjustments to a GAAP net loss in the three months ended March 31, 2020.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210505006138/en/

Contacts

Brad Wolfe
Chief Financial Officer FalconStor Software Inc.
investorrelations@falconstor.com

CONTACT US AROUND THE GLOBE

Corporate Headquarters
701 Brazos Street
Suite 400
Austin, Texas 78701
Tel: +1.631.777.5188
salesinfo@falconstor.com

Europe Headquarters
Rosa-Bavarese-Straße 3
80639 Munich, Germany
Tel: +49 (0) 89.41615321.10
salesemea@falconstor.com