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

Rhea-AI Summary

FalconStor Software, Inc. (OTCQB: FALC) reported solid first-quarter fiscal 2021 results, ending March 31, with a 20% year-over-year revenue increase. Product revenue soared by 104%, reaching $2.1 million, reflecting the company's transition to a subscription model. Total revenue hit $3.8 million, up from $3.2 million in 2020. Noteworthy net income of $425,248 was recorded, compared to a loss of $0.7 million in the previous year. The focus remains on modernizing backup solutions for the cloud, enhancing data security, and capitalizing on new customer acquisitions.

Positive

• 20% year-over-year total revenue growth to $3.8 million.
• 104% year-over-year product revenue growth to $2.1 million.
• New customer billings increased to $3.2 million, up from $1.1 million.
• GAAP net income of $425,248 compared to a net loss of $(0.7) million in Q1 2020.
• Ending cash balance rose to $2.0 million from $1.0 million.

Negative

• Total operating expenses increased to $3.2 million, compared to $3.0 million in Q1 2020.
• Total cost of revenue slightly increased to $0.6 million from $0.5 million.

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		11,07

FAQ

What were FalconStor's financial results for Q1 2021?

FalconStor reported total revenue of $3.8 million, a 20% increase year-over-year, with product revenue up 104% to $2.1 million.

How did FalconStor's net income change in Q1 2021?

FalconStor recorded a net income of $425,248 in Q1 2021, compared to a net loss of $(0.7) million in the same quarter last year.

What drove the revenue growth for FalconStor in Q1 2021?

The revenue growth was primarily driven by a significant increase in product revenue and new customer acquisitions.

What are FalconStor's cash reserves as of Q1 2021?

FalconStor's ending cash balance was $2.0 million as of Q1 2021, up from $1.0 million in Q1 2020.

What strategic focus areas did FalconStor highlight in the press release?

FalconStor emphasized the modernization of backup and archival solutions for the cloud, improving data security, and reducing complexity for enterprises.