EX-99 2 falc-ex99_1.htm EX-99.1 EX-99

 

Exhibit 99.1

img100405939_0.jpg 

 

For more information, contact:

FalconStor Software, Inc.

Vincent Sita

Chief Financial Officer

vincent.sita@falconstor.com

 

FalconStor Software Announces First Quarter of 2023 Results

 

Expanding Hybrid Cloud Momentum Fuels ARR Growth

 

•
Generated 11% year-over-year increase in total GAAP revenue
•
Generated 81% increase in total hybrid cloud ARR run-rate for Q1 versus the previous quarter
•
Generated 23% increase in MSP-driven hybrid cloud ARR run-rate for Q1 versus the previous quarter

 

AUSTIN, TEXAS (May 10, 2023) - FalconStor Software, Inc. (OTCQB: FALC), a trusted data protection leader modernizing disaster recovery and backup for the hybrid cloud world, today announced financial results for its first quarter of 2023, which ended on March 31, 2023.

 

“We are encouraged with the progress we made in Q1, as our joint sales with IBM to deliver hybrid cloud data protection solutions to IBM customers continued to grow,” said Todd Brooks, FalconStor CEO. “IBM’s hybrid cloud focus is a key element of its growth strategy, as detailed in each of their earnings announcements over the last several quarters. Our joint solutions enable IBM customers across the globe to optimize data protection within each of their operating environments, whether those environments run on-premises or in the cloud. In addition, our partnership with IBM is enabling MSPs to expand the backup-as-a-service offerings they provide to IBM and non-IBM customers alike, as more and more enterprises entrust MSPs to manage their IT environments.”

 

“While total revenue in Q1 increased year over year by 11%, total revenue decreased by 11% compared to the previous quarter, as we continued our shift from perpetual revenue to annual recurring revenue within our legacy business and continued to ramp our hybrid cloud revenue. Our 81% increase in hybrid cloud ARR run-rate in Q1 compared to the previous quarter continues to demonstrate early validation of our expanding partner sales since the formal launch of our IBM relationship at the beginning of the second half of 2022, stated Brooks. “In addition, while we materially improved our net income compared to the first quarter of 2022, we were not profitable in Q1 and must continue to tightly manage operating expenses to produce consistent quarterly profitability as we ramp our hybrid cloud revenue.”

 

First Quarter 2023 Financial Results

•
Hybrid Cloud ARR Run-Rate: 81% increase compared to the previous quarter, and 394% increase year over year
•
Ending Cash: $1.8 million, compared to $2.0 million in the previous quarter, and $3.4 million in the first quarter of fiscal year 2022
•
Total Revenue: $2.3 million, compared to $2.5 million in the previous quarter, and $2.0 million in the first quarter of fiscal year 2022
•
Total Cost of Revenue: $0.4 million, compared to $0.4 million in the previous quarter, and $0.4 million in the first quarter of fiscal year 2022
•
Total Operating Expenses: $2.3 million, compared to $2.2 million in the previous quarter, and $2.7 million in the first quarter of fiscal year 2022
•
GAAP Net Income (Loss): ($0.4) million, compared to $20 thousand in the previous quarter, and ($1.1) million in the first quarter of fiscal year 2022

 

 

 

1

 

Conference Call and Webcast Information

 

WHO: Todd Brooks, Chief Executive Officer, FalconStor and Vincent Sita, Chief Financial Officer, FalconStor

 

WHEN: Wednesday, May 10, 2023, 4:00 PM Central; 5:00 PM Eastern

 

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

 

FALCONSTOR FIRST QUARTER 2023 FINANCIAL TELECONFERENCE AND PRESENTATION

 

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

 

https://register.gotowebinar.com/register/4941630097261054555

 

 

Conference Call:

Please dial the following if you would like to interact with and ask questions of FalconStor hosts:

Toll Free: 877-309-2074

Access Code: 349-959-717

 

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) depreciation, (ii) amortization, (iii) restructuring expenses, (iv) severance expenses, (v) board expenses, (vi) stock based compensation, (vii) non-operating expenses (income) including income taxes and interest & other expenses (income). For a reconciliation of our GAAP and non-GAAP financial results, please refer to our Reconciliation of Net Income (Loss) to Adjusted EBITDA presented in this release.

 

About FalconStor Software

FalconStor is the trusted data protection software leader modernizing disaster recovery and backup operations for the hybrid cloud world. The Company enables enterprise customers and managed service providers to secure, migrate, and protect their data while reducing data storage and long-term retention costs by up to 95%. More than 1,000 organizations and managed service providers worldwide standardize on FalconStor as the foundation for their cloud first data protection future. Our products are offered through and supported by a worldwide network of leading managed service providers, systems integrators, resellers, and original equipment manufacturers.

 

# # #

 

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.

2

 

CONTACT INFORMATION

For more information, contact:

Vincent Sita

Chief Financial Officer FalconStor Software Inc.

investorrelations@falconstor.com

 

CONTACT US AROUND THE GLOBE

 

Corporate Headquarters

 

Europe Headquarters

501 Congress Avenue

 

GERMANY

Suite 150

 

Landsberger Straße 302

Austin, Texas 78701

 

80687 München, Germany

Tel: +1.631.777.5188

 

salesemea@falconstor.com

salesinfo@falconstor.com

 

 

 

3

 

FalconStor Software, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

March 31, 2023

 

 

December 31, 2022

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,839,227

 

 

$

2,011,062

 

Accounts receivable, net

 

 

1,790,174

 

 

 

2,278,802

 

Prepaid expenses and other current assets

 

 

1,033,747

 

 

 

897,493

 

Contract assets, net

 

 

247,451

 

 

 

181,933

 

Total current assets

 

 

4,910,599

 

 

 

5,369,290

 

Property and equipment, net

 

 

78,126

 

 

 

86,263

 

Operating lease right-of-use assets

 

 

17,370

 

 

 

34,416

 

Software development costs, net

 

 

46,001

 

 

 

53,057

 

Other assets, net

 

 

37,741

 

 

 

98,747

 

Goodwill

 

 

4,150,339

 

 

 

4,150,339

 

Other intangible assets, net

 

 

13,285

 

 

 

20,086

 

Contract assets, net

 

 

263,768

 

 

 

357,914

 

Total assets

 

$

9,517,229

 

 

$

10,170,112

 

Liabilities and Stockholders' Deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

436,711

 

 

$

387,379

 

Accrued expenses

 

 

1,220,138

 

 

 

1,427,979

 

Operating lease liabilities

 

 

17,370

 

 

 

34,416

 

Short-term note payable

 

 

101,227

 

 

 

177,149

 

Deferred revenue, net

 

 

3,589,822

 

 

 

3,684,742

 

Total current liabilities

 

 

5,365,268

 

 

 

5,711,665

 

Other long-term liabilities

 

 

956,267

 

 

 

956,023

 

Notes payable, net

 

 

2,165,874

 

 

 

2,163,090

 

Deferred tax liabilities, net

 

 

537,766

 

 

 

537,651

 

Deferred revenue, net

 

 

1,402,131

 

 

 

1,281,107

 

Total liabilities

 

 

10,427,306

 

 

 

10,649,536

 

Commitments and contingencies

 

 

 

 

 

 

Series A redeemable convertible preferred stock

 

 

16,253,084

 

 

 

15,928,018

 

Total stockholders' deficit

 

 

(17,163,161

)

 

 

(16,407,442

)

Total liabilities and stockholders' deficit

 

$

9,517,229

 

 

$

10,170,112

 

 

 

4

 

FalconStor Software, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Revenue:

 

 

 

 

 

 

Product revenue

 

$

1,022,186

 

 

$

594,928

 

Support and services revenue

 

 

1,246,210

 

 

 

1,454,179

 

Total revenue

 

 

2,268,396

 

 

 

2,049,107

 

Cost of revenue:

 

 

 

 

Product

 

 

34,129

 

 

 

20,719

 

Support and service

 

 

341,188

 

 

 

394,549

 

Total cost of revenue

 

 

375,317

 

 

 

415,268

 

Gross profit

 

 

1,893,079

 

 

 

1,633,839

 

Operating expenses:

 

 

 

 

 

Research and development costs

 

 

618,527

 

 

 

705,981

 

Selling and marketing

 

 

802,566

 

 

 

1,189,846

 

General and administrative

 

 

892,654

 

 

 

849,939

 

Restructuring costs

 

 

—

 

 

 

744

 

Total operating expenses

 

 

2,313,747

 

 

 

2,746,510

 

Operating income (loss)

 

 

(420,668

)

 

 

(1,112,671

)

Interest and other expense

 

 

(79,863

)

 

 

(117,995

)

Income (loss) before income taxes

 

 

(500,531

)

 

 

(1,230,666

)

Income tax expense (benefit)

 

 

(52,761

)

 

 

(121,260

)

Net income (loss)

 

$

(447,770

)

 

$

(1,109,406

)

Less: Accrual of Series A redeemable convertible preferred stock dividends

 

 

315,215

 

 

 

300,921

 

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

 

 

9,851

 

 

 

14,815

 

Net income (loss) attributable to common stockholders

 

$

(772,836

)

 

$

(1,425,142

)

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

 

$

(0.11

)

 

$

(0.20

)

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

 

$

(0.11

)

 

$

(0.20

)

Weighted average basic shares outstanding

 

 

7,119,735

 

 

 

7,082,276

 

Weighted average diluted shares outstanding

 

 

7,119,735

 

 

 

7,082,276

 

 

5

 

FalconStor Software, Inc. and Subsidiaries

Supplemental Information

Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA

 

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Net income (loss)

 

$

(447,770

)

 

$

(1,109,406

)

Income tax expense

 

 

(52,761

)

 

 

(121,260

)

Interest and other expense

 

 

(79,863

)

 

 

(117,995

)

Depreciation and amortization

 

 

25,101

 

 

 

35,519

 

Restructuring costs

 

 

-

 

 

 

744

 

Other restructuring costs

 

 

66

 

 

 

4,302

 

Board costs

 

 

117,973

 

 

 

184,435

 

Stock based compensation

 

 

5,331

 

 

 

8,184

 

Adjusted EBITDA

 

$

(431,923

)

 

$

(1,115,477

)

 

 

6