Hybrid Cloud ARR Run-Rate and Cash Growth

• 57% increase in total hybrid cloud ARR run-rate vs. Q2 2024
• 77% increase in cloud-native ARR run-rate vs. Q2 2024
• 13% increase in cash vs. Q2 2024

FalconStor Software, Inc. (OTCMarkets.com: FALC), a trusted data protection leader modernizing data protection and intelligence for the hybrid cloud world, today announced financial results for its second quarter of 2025, which ended on June 30, 2025.

“Our strategic shift to subscription and consumption-based recurring revenue models continued in Q2, with hybrid cloud ARR run-rate increasing 57% year-over-year,” said Todd Brooks, CEO of FalconStor Software. “This shift is foundational to building a resilient, durable business that aligns with the evolving needs of enterprise customers running mission-critical workloads across on-premises and hybrid cloud environments.”

“While total revenue declined year-over-year due to deal timing and the expanding role of monthly consumption contracts, the underlying momentum in our hybrid cloud business is encouraging. With strong IBM ecosystem alignment, expanding global partnerships, and accelerating customer adoption, we are confident in our long-term growth trajectory and FalconStor’s growing role in powering data resilience for the world’s most critical workloads.”

Second Quarter 2025 Financial Results

• Hybrid Cloud ARR Run-Rate: 57% increase trailing twelve months
• Ending Cash: $2.9 million, compared to $2.5 million in the second quarter of fiscal year 2024
• Total Revenue: $2.1 million, compared to $2.4 million in the second quarter of fiscal year 2024
• Total Operating Expenses: $2.2 million, compared to $2.0 million in the second quarter of fiscal year 2024
• Non-GAAP EBITDA: $(0.5) million, compared to $0.1 million in the second quarter of fiscal year 2024
• GAAP Net Income (Loss): $(0.5) million, compared to $(0.03) million in the second quarter of fiscal year 2024

“While the quarter produced negative year-over-year revenue growth, we remain focused on long-term growth, innovation, and delivering excellent customer service. At the same time, we are taking a disciplined approach to managing expenses and improving operational efficiency to strengthen our financial foundation and support long-term, sustainable growth,” said Vincent Sita, FalconStor CFO.

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.

Please click this link for accompanying financial charts.

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, system 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250806288637/en/

We are taking a disciplined approach to managing expenses and improving operational efficiency to strengthen our financial foundation and support long-term, sustainable growth”. Vincent Sita, FalconStor CFO