Close

Form 8-K FALCONSTOR SOFTWARE INC For: Nov 10

FREE Breaking News Alerts from StreetInsider.com!

E-mail Address

StreetInsider.com Top Tickers, 4/23/2024

1. TSLA
2. SPY
3. GM
4. SPOT
5. AMZN
6. SHW
7. AAPL
8. IBM
9. MINN
10. NVDA


November 10, 2021 4:10 PM EST

Exhibit 99.1
 
logo_colora07a.jpg

For more information, contact:
FalconStor Software, Inc.
Brad Wolfe
Chief Financial Officer
brad.wolfe@falconstor.com

FalconStor Software Announces Third Quarter of 2021 Results

Managed Service Provider Adoption and Hybrid Cloud Momentum Fuel Subscription Revenue Growth
Partially Offsetting Declines in Legacy Business

•Delivered a 35% year-over-year increase in software subscription revenue for Q3 and a 54% year-over-year increase for the first nine months of 2021
•Added two new managed service provider (MSP) partners for our StorSafe secure backup-as-a-service solution under new disruptive monthly recurring pricing model launched in Q3
•Generated GAAP EPS of $0.01 per share during the quarter and GAAP EPS of ($0.11) per share for the first nine months of 2021


AUSTIN, TEXAS (November 10, 2021) - FalconStor Software, Inc. (OTCQB: FALC), the trusted data protection software leader modernizing disaster recovery and backup operations for the hybrid cloud world, today announced financial results for its third quarter, which ended on September 30, 2021, delivering a 35% year-over-year increase in subscription revenue fueled by the growth in managed service provider business and market adoption of hybrid cloud data protection solutions.

“We continue to make solid progress against our strategic plans to reinvent FalconStor and enable secure hybrid cloud backup and data protection,” said Todd Brooks, FalconStor CEO. “Driven by continued adoption of the FalconStor StorSafe long-term data protection solution, we accelerated our strategic focus on a recurring revenue model better aligned with today’s market. As part of this focus, we introduced a new and disruptive recurring monthly pricing model for our managed service providers, and continued migrating our installed based to a subscription revenue model. As a result, total subscription revenue increased 35% compared to Q3 of 2020, and 54% for the first nine months of 2021 compared to the same period last year.

“While we are encouraged by our subscription revenue growth, we are continuing to work toward our goal of consistent total revenue growth, as total revenue decreased by 26% year-over-year during the quarter and is down 7% for the first nine months of 2021 compared to the same period in 2020. As the recurring percentage of total revenue continues to increase over the next several quarters, and the reduction in perpetual license sales decreases, we are committed to driving more predictable total revenue growth, delivering profitability, and generating cash from operations, as we invest to grow.

“Migration to the cloud, data center rationalization, and increased leverage of outsourced managed services are top priorities for enterprise CIOs in the post-pandemic world, and FalconStor plays a vital role in each,” added Brooks. “We are excited by our hybrid cloud focus, the efficient routes to market that we are building through our managed service provider partners, and trust our shareholders have placed in our team to deliver customer and shareholder value.”

Third Quarter 2021 Financial Results

•Subscription Revenue: 35% increase to $0.8 million, compared to $0.6 million in the third quarter of fiscal year 2020
•Subscription Revenue % of Total Revenue: 23%, compared to 13% in the third quarter of fiscal year 2020
•Total Revenue: $3.3 million, compared to $4.4 million in the third quarter of fiscal year 2020
•Total Cost of Revenue: $0.4 million, compared to $0.4 million in the third quarter of fiscal year 2020
•Total Operating Expenses: $2.4 million, compared to $2.3 million in the third quarter of fiscal year 2020
•GAAP Net Income: $0.4 million, compared to $1.5 million in the third quarter of fiscal year 2020
•Ending Cash: $3.5 million, compared to $0.9 million in the third quarter of fiscal year 2020


1

Nine Months Ended 2021 Financial Results

•Subscription Revenue: 54% increase to $2.6 million, compared to $1.7 million in the first nine months of 2020
•Subscription Revenue % of Total Revenue: 25%, compared to 15% in the first nine months of 2020
•Total Revenue: $10.4 million, compared to $11.1 million in the first nine months of 2020
•Total Cost of Revenue: $1.5 million, compared to $1.4 million in the first nine months of 2020
•Total Operating Expenses: $8.6 million, compared to $7.9 million in the first nine months of 2020
•GAAP Net Income: $0.4 million, compared to $1.2 million in the first nine months of 2020
•Ending Cash: $3.5 million, compared to $0.9 million in the first nine months of 2020

Guidance

Given our less than anticipated year-to-date total revenue, we are revising the 2021 guidance we have previously provided.

guidancea.jpg
*Adjusted EBITDA adds back Non-Operating and Other Expenses and Income


Conference Call and Webcast Information

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

WHEN: Wednesday, November 10, 2021, 4:00 P.M. Central Time

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

FALCONSTOR THIRD QUARTER 2021 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/4614368145758035469

Conference Call:
Please dial the following if you would like to interact with and ask questions to FalconStor hosts:
Toll Free: 1-877-309-2074
Access Code: 342-776-416

2

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 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 (“MSPs”), systems integrators, resellers, and original equipment manufacturers (“OEMs”).

# # #

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.
CONTACT INFORMATION
For more information, contact:
Brad Wolfe
Chief Financial Officer FalconStor Software Inc.
investorrelations@falconstor.com

CONTACT US AROUND THE GLOBE

Corporate HeadquartersEurope Headquarters
501 Congress Avenue
Landsberger Strasse 302
Suite 150
Munich, Germany
Austin, Texas 78701Tel: +49 (0) 89.41615321.10
Tel: +1.631.777.5188salesemea@falconstor.com
salesinfo@falconstor.com



3

FalconStor Software, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30, 2021December 31, 2020
 (unaudited) 
Assets  
Current assets:  
Cash and cash equivalents$3,474,784 $1,920,656 
Accounts receivable, net2,285,117 2,836,571 
Prepaid expenses and other current assets1,537,267 1,837,596 
Contract assets, net169,835 254,483 
Inventory15,421 15,275 
Total current assets7,482,424 6,864,581 
Property and equipment, net193,028 197,020 
Operating lease right-of-use assets140,238 536,272 
Deferred tax assets, net310,755 330,552 
Software development costs, net14,345 19,278 
Other assets, net114,828 863,964 
Goodwill4,150,339 4,150,339 
Other intangible assets, net64,295 100,134 
Contract assets192,286 343,934 
 Total assets$12,662,538 $13,406,074 
Liabilities and Stockholders' Deficit  
Current liabilities:  
Accounts payable$335,092 $453,791 
Accrued expenses1,018,878 2,293,765 
Operating lease liabilities87,381 665,074 
Short-term loan, net of debt issuance costs and discounts— 3,320,863 
Deferred revenue, net3,709,005 4,603,270 
Total current liabilities5,150,356 11,336,763 
Other long-term liabilities637,099 703,889 
Notes payable, net2,150,574 754,000 
Operating lease liabilities53,430 — 
Deferred tax liabilities, net525,512 513,027 
Deferred revenue, net1,569,813 1,765,859 
Total liabilities10,086,784 15,073,538 
Commitments and contingencies  
Series A redeemable convertible preferred stock14,075,434 12,940,722 
Total stockholders' deficit(11,499,680)(14,608,186)
Total liabilities and stockholders' deficit$12,662,538 $13,406,074 

4

FalconStor Software, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) 
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Revenue:    
Product revenue$1,547,013 $2,521,695 $5,288,747 $5,202,713 
Support and services revenue1,736,456 1,914,705 5,081,795 5,913,486 
Total revenue3,283,469 4,436,400 10,370,542 11,116,199 
Cost of revenue:    
Product41,351 48,895 298,966 250,185 
Support and service400,934 367,063 1,233,067 1,109,379 
Total cost of revenue442,285 415,958 1,532,033 1,359,564 
Gross profit$2,841,184 $4,020,442 $8,838,509 $9,756,635 
Operating expenses:    
Research and development costs711,273 600,430 2,032,360 1,809,354 
Selling and marketing1,610,635 1,026,241 4,267,010 3,027,372 
General and administrative633,954 358,701 2,129,921 2,297,451 
Gain on litigation settlement(632,600)— (632,600)— 
Restructuring costs68,704 317,595 792,754 758,740 
Total operating expenses2,391,966 2,302,967 8,589,445 7,892,917 
Operating income (loss)449,218 1,717,475 249,064 1,863,718 
Gain on debt extinguishment— — 754,000 — 
Interest and other expense(58,257)(159,994)(489,264)(586,082)
Income (loss) before income taxes390,961 1,557,481 513,800 1,277,636 
Income tax expense (benefit)16,529 11,272 63,804 44,709 
Net income (loss)$374,432 $1,546,209 $449,996 $1,232,927 
Less: Accrual of Series A redeemable convertible preferred stock dividends288,802 266,007 848,898 812,362 
Less: Accretion to redemption value of Series A redeemable convertible preferred stock13,517 175,335 285,814 366,566 
Net income (loss) attributable to common stockholders$72,113 $1,104,867 $(684,716)$53,999 
Basic net income (loss) per share attributable to common stockholders$0.01 $0.19 $(0.11)$0.01 
Diluted net income (loss) per share attributable to common stockholders$0.01 $0.19 $(0.11)$0.01 
Weighted average basic shares outstanding6,990,723 5,919,837 6,324,370 5,919,773 
Weighted average diluted shares outstanding7,039,421 5,959,385 6,324,370 5,943,794 
5

FalconStor Software, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Measures
(Unaudited) 
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
GAAP income (loss) from operations$449,218 $1,717,475 $249,064 $1,863,718 
Non-cash stock option expense (1)4,916 3,822 $14,084 $11,392 
Restructuring costs (3)68,704 317,595 792,754 758,740 
Gain on litigation settlement (5)$(632,600)$— $(632,600)$— 
Non-GAAP income (loss) from operations$(109,762)$2,038,892 $423,302 $2,633,850 
GAAP net income (loss) attributable to common stockholders$72,113 $1,104,867 $(684,716)$53,999 
Non-cash stock option expense, net of income taxes (2)4,916 3,822 14,084 11,392 
Restructuring costs (3)68,704 317,595 792,754 758,740 
Gain on litigation settlement(632,600)— (632,600)— 
Gain on debt extinguishment— — (754,000)— 
Effects of Series A redeemable convertible preferred stock (4)302,319 441,342 1,134,712 1,178,928 
Non-GAAP net income (loss) attributable to common stockholders$(184,548)$1,867,626 $(129,766)$2,003,059 
GAAP gross margin87 %91 %85 %88 %
Non-cash stock option expense (1)0 %0 %0 %0 %
Non-GAAP gross margin87 %91 %85 %88 %
GAAP gross margin - Product97 %98 %94 %95 %
Non-cash stock option expense (1)0 %0 %0 %0 %
Non-GAAP gross margin - Product97 %98 %94 %95 %
GAAP gross margin - Support and Service77 %81 %76 %81 %
Non-cash stock option expense (1)0 %0 %0 %0 %
Non-GAAP gross margin - Support and Service77 %81 %76 %81 %
GAAP operating margin14 %39 %2 %17 %
Non-cash stock option expense (1)— %— %— %— %
Restructuring costs (3)2 %7 %8 %7 %
Non-GAAP operating margin16 %46 %10 %24 %
GAAP Basic EPS$0.01 $0.19 $(0.11)$0.01 
Non-cash stock option expense, net of income taxes (2)0.00 0.00 0.00 0.00 
Restructuring costs (3)0.01 0.05 0.13 0.13 
6

Gain on litigation settlement (5)(0.09)0.00 (0.10)0.00 
Gain on debt extinguishment (6)0.00 0.00 (0.12)0.00 
Effects of Series A redeemable convertible preferred stock (4)0.04 0.08 0.18 0.20 
Non-GAAP Basic EPS$(0.03)$0.32 $(0.02)$0.34 
GAAP Diluted EPS$0.01 $0.19 $(0.11)$0.01 
Non-cash stock option expense, net of income taxes (2)0.00 0.00 0.00 0.00 
Restructuring costs (3)0.01 0.05 0.13 0.13 
Gain on litigation settlement (5)(0.09)0.00 (0.10)0.00 
Gain on debt extinguishment (6)0.00 0.00 (0.12)0.00 
Effects of Series A redeemable convertible preferred stock (4)0.04 0.07 0.18 0.20 
Non-GAAP Diluted EPS$(0.03)$0.31 $(0.02)$0.34 
Weighted average basic shares outstanding (GAAP and Non-GAAP)6,990,723 5,919,837 6,324,370 5,919,773 
Weighted average diluted shares outstanding (GAAP)7,039,421 5,959,385 6,324,370 5,943,794 
Weighted average diluted shares outstanding (Non-GAAP)6,990,723 5,959,385 6,324,370 5,943,794 

Footnotes:
(1)Represents non-cash, stock-based compensation charges as follows:
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Cost of revenue - Product$232 $— $688 $— 
Cost of revenue - Support and Service185 104 549 310 
Research and development costs167 433 167 1,289 
Selling and marketing2,915 186 8,475 554 
General and administrative1,417 3,099 4,205 9,239 
Total non-cash stock based compensation expense$4,916 $3,822 $14,084 $11,392 
 
(2)Represents the effects of non-cash stock-based compensation expense recognized, net of related income tax effects. For the three and nine months ended September 30, 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 a gain for the legal settlement of a contractual dispute with a marketing/sales firm.

(6)Represents the gain recorded when the Company's loan with the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act was forgiven on March 30, 2021.
7

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings