Continued Strategic Progress, Including New Growth Equity Raise
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 second quarter and first half of fiscal year 2021, which ended on June 30, 2021.
“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. “While we were disappointed that our second quarter total revenue declined year-over-year by 6.9%, total revenue for the first half of 2021 increased year-over-year by 6.1%. Over the next year, we expect our year-over-year quarterly 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. “Our market, strategic focus, and results over the last three years allowed us to successfully raise $4 million in new growth equity since the beginning of the second quarter of 2021. We are excited by the trust our shareholders have placed in our team to deliver customer and shareholder value.”
Second Quarter 2021 Financial Results
- Product Revenue: 2% product revenue decline to $1,602,005, compared to $1,632,055 in the second quarter of fiscal year 2020
- New Customer Billings: $1,938,863, compared to $1,915,199 in the second quarter of fiscal year 2020
- Total Revenue: $3.3 million, compared to $3.5 million in the second quarter of fiscal year 2020
- Total Cost of Revenue: $0.4 million, compared to $0.4 million in the second quarter of fiscal year 2020
- Total Operating Expenses: $3.0 million, compared to $2.6 million in the second quarter of fiscal year 2020
- GAAP Net Income (Loss): $(0.3) million, compared to $0.4 million in the second quarter of fiscal year 2020
- Ending Cash: $3.7 million, compared to $1.5 million in the second quarter of fiscal year 2020
First Half 2021 Financial Results
- Product Revenue: 40% product revenue increase to $3.7 million, compared to $2.7 million in the first half of fiscal year 2020
- New Customer Billings: $1,500,540, compared to $1,469,815 in the first half of fiscal year 2020
- Total Revenue: $7.1 million, compared to $6.7 million in the first half of fiscal year 2020
- Total Cost of Revenue: $1.1 million, compared to $0.9 million in the first half of fiscal year 2020
- Total Operating Expenses: $6.2 million, compared to $5.6 million in the first half of fiscal year 2020
- GAAP Net Income (Loss): $0.1 million, compared to $(0.3) million in the first half of fiscal year 2020
- Ending Cash: $3.7 million, compared to $1.5 million in the first half of fiscal year 2020
Second 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 our win trajectory in IBM environments, specifically IBM I and AS/400 system implementations
- Continued to deliver value to our Managed Service Provider business partners, with our trusted partner BlueChip growing to 300 customers and 4 petabytes of data under management.
Guidance
We are affirming the 2021 guidance we have previously provided.
2021 Proposed Guidance |
|||||||||||||
| Guidance SEC Format (IN $ MILLIONS) | 2020 Actual |
Low |
High |
Increase YOY |
Increase YOY |
||||||||
| Total Revenue | $ |
14.77 |
|
$ |
15.08 |
|
$ |
16.15 |
|
3 |
% |
9 |
% |
| Adjusted EBITDA* | $ |
4.13 |
|
$ |
4.24 |
|
$ |
5.06 |
|
3 |
% |
22 |
% |
| % |
|
28 |
% |
|
28 |
% |
|
31 |
% |
||||
| Net Income | $ |
1.14 |
|
$ |
1.93 |
|
$ |
2.82 |
|
70 |
% |
148 |
% |
| % |
|
8 |
% |
|
13 |
% |
|
17 |
% |
||||
| Rule of 40 (Revenue Growth % + Adjusted EBITDA %) |
|
17 |
|
|
31 |
|
|
41 |
|
80 |
% |
139 |
% |
| *Adjusted EBITDA excludes Non Operating Expenses | |||||||||||||
Conference Call and Webcast Information
WHO: Todd Brooks, Chief Executive Officer, FalconStor and Brad Wolfe, Chief Financial Officer, FalconStor
WHEN: Wednesday, August 4, 2021, 4:00 P.M. Central Time
To register for our earnings call, please click the following link:
FALCONSTOR SECOND 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/5598359582179255563
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: 613-637-608
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 39 issued patents and six patent applications, we have over an exabyte of data under management and offer products that are used by approximately 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
|
||||||||||
|
|
June 30, 2021 |
|
December 31, 2020 |
||||||
|
|
(unaudited) |
|
|
||||||
Assets |
|
|
|
|
||||||
Current assets: |
|
|
|
|
||||||
Cash and cash equivalents |
|
$ |
3,741,600 |
|
|
|
$ |
1,920,656 |
|
|
Accounts receivable, net |
|
2,162,640 |
|
|
|
2,836,571 |
|
|
||
Prepaid expenses and other current assets |
|
1,513,363 |
|
|
|
1,837,596 |
|
|
||
Contract assets, net |
|
354,096 |
|
|
|
254,483 |
|
|
||
Inventory |
|
15,381 |
|
|
|
15,275 |
|
|
||
Total current assets |
|
7,787,080 |
|
|
|
6,864,581 |
|
|
||
Property and equipment, net |
|
186,476 |
|
|
|
197,020 |
|
|
||
Operating lease right-of-use assets |
|
194,888 |
|
|
|
536,272 |
|
|
||
Deferred tax assets, net |
|
313,697 |
|
|
|
330,552 |
|
|
||
Software development costs, net |
|
15,994 |
|
|
|
19,278 |
|
|
||
Other assets, net |
|
124,552 |
|
|
|
863,964 |
|
|
||
Goodwill |
|
4,150,339 |
|
|
|
4,150,339 |
|
|
||
Other intangible assets, net |
|
78,504 |
|
|
|
100,134 |
|
|
||
Contract assets |
|
206,305 |
|
|
|
343,934 |
|
|
||
Total assets |
|
$ |
13,057,835 |
|
|
|
$ |
13,406,074 |
|
|
Liabilities and Stockholders' Deficit |
|
|
|
|
||||||
Current liabilities: |
|
|
|
|
||||||
Accounts payable |
|
$ |
578,660 |
|
|
|
$ |
453,791 |
|
|
Accrued expenses |
|
1,778,444 |
|
|
|
2,293,765 |
|
|
||
Operating lease liabilities |
|
125,048 |
|
|
|
665,074 |
|
|
||
Short-term loan, net of debt issuance costs and discounts |
|
— |
|
|
|
3,320,863 |
|
|
||
Deferred revenue, net |
|
4,097,365 |
|
|
|
4,603,270 |
|
|
||
Total current liabilities |
|
6,579,517 |
|
|
|
11,336,763 |
|
|
||
Other long-term liabilities |
|
638,300 |
|
|
|
703,889 |
|
|
||
Notes payable, net |
|
2,146,596 |
|
|
|
754,000 |
|
|
||
Operating lease liabilities |
|
71,205 |
|
|
|
— |
|
|
||
Deferred tax liabilities, net |
|
520,166 |
|
|
|
513,027 |
|
|
||
Deferred revenue, net |
|
1,865,355 |
|
|
|
1,765,859 |
|
|
||
Total liabilities |
|
11,821,139 |
|
|
|
15,073,538 |
|
|
||
Commitments and contingencies |
|
|
|
|
||||||
Series A redeemable convertible preferred stock |
|
13,773,115 |
|
|
|
12,940,722 |
|
|
||
Total stockholders' deficit |
|
(12,536,419 |
) |
|
|
(14,608,186 |
) |
|
||
Total liabilities and stockholders' deficit |
|
$ |
13,057,835 |
|
|
|
$ |
13,406,074 |
|
|
FalconStor Software, Inc. and Subsidiaries
|
||||||||||||||||||||
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||||||
Revenue: |
|
|
|
|
|
|
|
|
||||||||||||
Product revenue |
|
$ |
1,602,005 |
|
|
|
$ |
1,632,055 |
|
|
|
$ |
3,741,734 |
|
|
|
$ |
2,681,018 |
|
|
Support and services revenue |
|
1,656,742 |
|
|
|
1,867,557 |
|
|
|
3,345,339 |
|
|
|
3,998,781 |
|
|
||||
Total revenue |
|
3,258,747 |
|
|
|
3,499,612 |
|
|
|
7,087,073 |
|
|
|
6,679,799 |
|
|
||||
Cost of revenue: |
|
|
|
|
|
|
|
|
||||||||||||
Product |
|
34,781 |
|
|
|
61,830 |
|
|
|
257,615 |
|
|
|
201,290 |
|
|
||||
Support and service |
|
405,960 |
|
|
|
334,396 |
|
|
|
832,133 |
|
|
|
742,316 |
|
|
||||
Total cost of revenue |
|
440,741 |
|
|
|
396,226 |
|
|
|
1,089,748 |
|
|
|
943,606 |
|
|
||||
Gross profit |
|
$ |
2,818,006 |
|
|
|
$ |
3,103,386 |
|
|
|
$ |
5,997,325 |
|
|
|
$ |
5,736,193 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||||||
Research and development costs |
|
661,147 |
|
|
|
534,000 |
|
|
|
1,321,087 |
|
|
|
1,208,924 |
|
|
||||
Selling and marketing |
|
1,259,735 |
|
|
|
1,019,940 |
|
|
|
2,656,375 |
|
|
|
2,001,131 |
|
|
||||
General and administrative |
|
658,100 |
|
|
|
845,581 |
|
|
|
1,495,967 |
|
|
|
1,938,750 |
|
|
||||
Restructuring costs |
|
421,737 |
|
|
|
153,685 |
|
|
|
724,050 |
|
|
|
441,145 |
|
|
||||
Total operating expenses |
|
3,000,719 |
|
|
|
2,553,206 |
|
|
|
6,197,479 |
|
|
|
5,589,950 |
|
|
||||
Operating income (loss) |
|
(182,713 |
) |
|
|
550,180 |
|
|
|
(200,154 |
) |
|
|
146,243 |
|
|
||||
Gain on debt extinguishment |
|
— |
|
|
|
— |
|
|
|
754,000 |
|
|
|
— |
|
|
||||
Interest and other expense |
|
(164,312 |
) |
|
|
(180,249 |
) |
|
|
(431,007 |
) |
|
|
(426,088 |
) |
|
||||
Income (loss) before income taxes |
|
(347,025 |
) |
|
|
369,931 |
|
|
|
122,839 |
|
|
|
(279,845 |
) |
|
||||
Income tax expense (benefit) |
|
2,659 |
|
|
|
(36,627 |
) |
|
|
47,275 |
|
|
|
33,437 |
|
|
||||
Net income (loss) |
|
$ |
(349,684 |
) |
|
|
$ |
406,558 |
|
|
|
$ |
75,564 |
|
|
|
$ |
(313,282 |
) |
|
Less: Accrual of Series A redeemable convertible preferred stock dividends |
|
282,926 |
|
|
|
260,595 |
|
|
|
560,096 |
|
|
|
546,355 |
|
|
||||
Less: Accretion to redemption value of Series A redeemable convertible preferred stock |
|
75,183 |
|
|
|
165,141 |
|
|
|
272,297 |
|
|
|
191,231 |
|
|
||||
Net income (loss) attributable to common stockholders |
|
$ |
(707,793 |
) |
|
|
$ |
(19,178 |
) |
|
|
$ |
(756,829 |
) |
|
|
$ |
(1,050,868 |
) |
|
Basic net income (loss) per share attributable to common stockholders |
|
$ |
(0.12 |
) |
|
|
$ |
— |
|
|
|
$ |
(0.13 |
) |
|
|
$ |
(0.18 |
) |
|
Diluted net income (loss) per share attributable to common stockholders |
|
$ |
(0.12 |
) |
|
|
$ |
— |
|
|
|
$ |
(0.13 |
) |
|
|
$ |
(0.18 |
) |
|
Weighted average basic shares outstanding |
|
6,021,483 |
|
|
|
5,919,837 |
|
|
|
5,985,672 |
|
|
|
5,919,740 |
|
|
||||
Weighted average diluted shares outstanding |
|
6,021,483 |
|
|
|
5,919,837 |
|
|
|
5,985,672 |
|
|
|
5,919,740 |
|
|
||||
FalconStor Software, Inc. and Subsidiaries
|
||||||||||||||||||||
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||||||
GAAP income (loss) from operations |
|
$ |
(182,713 |
) |
|
|
$ |
550,180 |
|
|
|
$ |
(200,154 |
) |
|
|
$ |
146,243 |
|
|
Non-cash stock option expense (1) |
|
4,697 |
|
|
|
3,060 |
|
|
|
$ |
9,168 |
|
|
|
$ |
7,570 |
|
|
||
Restructuring costs (3) |
|
421,737 |
|
|
|
153,685 |
|
|
|
724,050 |
|
|
|
441,145 |
|
|
||||
Non-GAAP income (loss) from operations |
|
$ |
243,721 |
|
|
|
$ |
706,925 |
|
|
|
$ |
533,064 |
|
|
|
$ |
594,958 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
GAAP net income (loss) attributable to common stockholders |
|
$ |
(707,793 |
) |
|
|
$ |
(19,178 |
) |
|
|
$ |
(756,829 |
) |
|
|
$ |
(1,050,868 |
) |
|
Non-cash stock option expense, net of income taxes (2) |
|
4,697 |
|
|
|
3,060 |
|
|
|
9,168 |
|
|
|
7,570 |
|
|
||||
Restructuring costs (3) |
|
421,737 |
|
|
|
153,685 |
|
|
|
724,050 |
|
|
|
441,145 |
|
|
||||
Effects of Series A redeemable convertible preferred stock (4) |
|
358,109 |
|
|
|
425,736 |
|
|
|
832,393 |
|
|
|
737,586 |
|
|
||||
Non-GAAP net income (loss) attributable to common stockholders |
|
$ |
76,750 |
|
|
|
$ |
563,303 |
|
|
|
$ |
808,782 |
|
|
|
$ |
135,433 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
GAAP gross margin |
|
86 |
|
% |
|
89 |
|
% |
|
85 |
|
% |
|
86 |
|
% |
||||
Non-cash stock option expense (1) |
|
0 |
|
% |
|
0 |
|
% |
|
0 |
|
% |
|
0 |
|
% |
||||
Non-GAAP gross margin |
|
86 |
|
% |
|
89 |
|
% |
|
85 |
|
% |
|
86 |
|
% |
||||
|
|
|
|
|
|
|
|
|
||||||||||||
GAAP gross margin - Product |
|
98 |
|
% |
|
96 |
|
% |
|
93 |
|
% |
|
92 |
|
% |
||||
Non-cash stock option expense (1) |
|
0 |
|
% |
|
0 |
|
% |
|
0 |
|
% |
|
0 |
|
% |
||||
Non-GAAP gross margin - Product |
|
98 |
|
% |
|
96 |
|
% |
|
93 |
|
% |
|
92 |
|
% |
||||
|
|
|
|
|
|
|
|
|
||||||||||||
GAAP gross margin - Support and Service |
|
75 |
|
% |
|
82 |
|
% |
|
75 |
|
% |
|
81 |
|
% |
||||
Non-cash stock option expense (1) |
|
0 |
|
% |
|
0 |
|
% |
|
0 |
|
% |
|
0 |
|
% |
||||
Non-GAAP gross margin - Support and Service |
|
75 |
|
% |
|
82 |
|
% |
|
75 |
|
% |
|
81 |
|
% |
||||
|
|
|
|
|
|
|
|
|
||||||||||||
GAAP operating margin |
|
(6 |
|
%) |
|
16 |
|
% |
|
(3 |
|
%) |
|
2 |
|
% |
||||
Non-cash stock option expense (1) |
|
0 |
|
% |
|
— |
|
% |
|
— |
|
% |
|
— |
|
% |
||||
Restructuring costs (3) |
|
13 |
|
% |
|
4 |
|
% |
|
10 |
|
% |
|
7 |
|
% |
||||
Non-GAAP operating margin |
|
7 |
|
% |
|
20 |
|
% |
|
7 |
|
% |
|
9 |
|
% |
||||
|
|
|
|
|
|
|
|
|
||||||||||||
GAAP Basic EPS |
|
$ |
(0.12 |
) |
|
|
$ |
0.00 |
|
|
|
$ |
(0.13 |
) |
|
|
$ |
(0.18 |
) |
|
Non-cash stock option expense, net of income taxes (2) |
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
||||
Restructuring costs (3) |
|
0.07 |
|
|
|
0.03 |
|
|
|
0.13 |
|
|
|
0.07 |
|
|
||||
Effects of Series A redeemable convertible preferred stock (4) |
|
0.06 |
|
|
|
0.07 |
|
|
|
0.14 |
|
|
|
0.13 |
|
|
||||
Non-GAAP Basic EPS |
|
$ |
0.01 |
|
|
|
$ |
0.10 |
|
|
|
$ |
0.14 |
|
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
GAAP Diluted EPS |
|
$ |
(0.12 |
) |
|
|
$ |
0.00 |
|
|
|
$ |
(0.13 |
) |
|
|
$ |
(0.18 |
) |
|
Non-cash stock option expense, net of income taxes (2) |
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
||||
Restructuring costs (3) |
|
0.07 |
|
|
|
0.03 |
|
|
|
0.12 |
|
|
|
0.07 |
|
|
||||
Effects of Series A redeemable convertible preferred stock (4) |
|
0.06 |
|
|
|
0.07 |
|
|
|
0.14 |
|
|
|
0.13 |
|
|
||||
Effects of increase in Non-GAAP diluted shares outstanding (5) |
|
0.00 |
|
|
|
(0.01 |
) |
|
|
0.00 |
|
|
|
0.00 |
|
|
||||
Non-GAAP Diluted EPS |
|
$ |
0.01 |
|
|
|
$ |
0.09 |
|
|
|
$ |
0.13 |
|
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average basic shares outstanding (GAAP and Non-GAAP) |
|
6,021,483 |
|
|
|
5,919,837 |
|
|
|
5,985,672 |
|
|
|
5,919,740 |
|
|
||||
Weighted average diluted shares outstanding (GAAP) |
|
6,021,483 |
|
|
|
5,919,837 |
|
|
|
5,985,672 |
|
|
|
5,919,740 |
|
|
||||
Weighted average diluted shares outstanding (Non-GAAP) |
|
6,093,507 |
|
|
|
5,949,389 |
|
|
|
6,034,514 |
|
|
|
5,934,744 |
|
|
||||
Footnotes: |
||
(1) |
Represents non-cash, stock-based compensation charges as follows: |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Cost of revenue - Product |
|
$ |
229 |
|
|
$ |
— |
|
|
$ |
456 |
|
|
$ |
— |
|
Cost of revenue - Support and Service |
|
183 |
|
|
103 |
|
|
364 |
|
|
206 |
|
||||
Research and development costs |
|
— |
|
|
428 |
|
|
— |
|
|
856 |
|
||||
Selling and marketing |
|
2,883 |
|
|
184 |
|
|
5,560 |
|
|
368 |
|
||||
General and administrative |
|
1,402 |
|
|
2,345 |
|
|
2,788 |
|
|
6,140 |
|
||||
Total non-cash stock based compensation expense |
|
$ |
4,697 |
|
|
$ |
3,060 |
|
|
$ |
9,168 |
|
|
$ |
7,570 |
|
(2) |
Represents the effects of non-cash stock-based compensation expense recognized, net of related income tax effects. For the three and six months ended June 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 the impact of an increase in diluted shares outstanding resulting from Non-GAAP adjustments to a GAAP net loss in the six months ended June 30, 2020. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210804006149/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
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Rosa-Bavarese-Straße 3
80639 Munich, Germany
Tel: +49 (0) 89.41615321.10
salesemea@falconstor.com
