MELVILLE, N.Y., July 28, 2005—FalconStor Software, Inc. (Nasdaq: FALC), a leading developer of network storage software solutions, today announced financial results for its second quarter ended June 30, 2005.
Revenues for the second quarter of 2005 increased 46% to $9.5 million, compared with $6.5 million for the same period a year ago. Operating expenses increased 13% from $8.4 million for the second quarter of 2004 to $9.4 million for the second quarter of 2005. Net income for the quarter was $0.3 million, or $0.01 per share, compared with a net loss of $1.7 million, or $0.04 per share, for the same period a year ago. Operating expenses in the second quarter of 2004 included $0.6 million in legal fees related to a patent litigation.
For the six months ended June 30, 2005, revenues increased 52% to $17.9 million, compared with $11.7 million for the same period a year ago. Operating expenses increased 13% from $16.1 million for the first six months of 2004 to $18.1 million for the first six months of 2005. Net income for the six month period was $0.2 million compared with a net loss of $3.9 million in the corresponding period a year ago. The company broke even on a diluted net loss per share basis compared to a net loss per share of $0.08 for the same period a year ago.
For the second quarter of 2005, revenues increased 13% from $8.4 million in the first quarter of 2005 to $9.5 million in the second quarter of 2005. Net income for the quarter was $0.3 million compared with a net loss of $0.1 million in the previous quarter.
The Company closed the quarter with $34.3 million in cash, cash equivalents and marketable securities, a $0.5 million increase from the previous quarter. Deferred revenue at June 30, 2005, increased to $6.9 million, or 13%, compared with the balance at March 31, 2005, and by 75% compared with the same period a year ago. Gross margins for the second quarter of 2005 increased to 82% compared with 78% for the same period a year ago.
“We are pleased with the end-user adoption, market recognition and OEM endorsement of our solutions in the fast-growing Business Continuity, Disk-based backup and cost-effective iSCSI SAN market segments,” said FalconStor Chairman and CEO ReiJane Huai. “We have confidence in our business prospects and we are ramping up marketing activities and expanding global sales territory coverage to realize the maximum growth potential for our shareholders.”
Second Quarter Highlights:
FalconStor continues to advance its product portfolio with new features, while expanding efforts to make its network storage solutions compatible with current and cutting edge technology. FalconStor has also continued to receive industry recognition for its channel efforts and products.
The company will host a conference call on Thursday, July 28 at 4:30 PM ET to discuss the results. To participate in the call, dial 1-800-946-0715 in the United States or 719-457-2643 outside the United States. To view the synchronized slide presentation during the call, visit: http://falconstor.webex.com.
Meeting Name: FalconStor Software Q2 2005 Earnings
Meeting password: ipstor
Meeting number: 761 613 109
To listen to a replay of the call beginning July 28 at 6:30 PM ET, dial 1-888-203-1112 in the United States or 719-457-0820 outside the United States, passcode 2543926, or visit www.falconstor.com/company/investor-relations
FalconStor Software, Inc. (Nasdaq: FALC) is a leading developer of network storage software designed to optimize the storage, protection and availability of enterprise data. FalconStor´s flagship product, IPStor, enables corporate IT to deploy a hardware-agnostic, network-centric foundation to maximize operating efficiency and business continuity, and to meet the availability requirements of mission-critical applications. IPStor-powered network storage solutions are available and supported by major OEMs, as well as system integrators and resellers worldwide.
Founded in 2000, FalconStor is headquartered in Melville, NY, with offices throughout Europe and the Asia Pacific regions including Paris, Tokyo and Taiwan. FalconStor is an active member of the Technical Support Alliance Network (TSANet), Storage Networking Industry Association (SNIA) and Fibre Channel Industry Association (FCIA). For more information, visit www.falconstor.com or call 1-631-777-5188.
This press release includes forward-looking statements that involve risk and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include: delays in product development; market acceptance of FalconStor's products and services; technological change in the storage and networking industries; competition in the network storage software market; the potential failure of FalconStor's OEM partners to introduce or to market products incorporating FalconStor's products; intellectual property issues; and other risk factors discussed in FalconStor's reports on Forms 10-K, 10-Q and other reports filed with the Securities and Exchange Commission.
FalconStor and IPStor are trademarks or registered trademarks of FalconStor Software, Inc. All other company and product names contained herein may be trademarks of the respective holders.