MELVILLE, N.Y., February 12, 2015 — FalconStor Software , Inc. (NASDAQ: FALC), a market leader in data protection and migration, today announced financial results for its fourth quarter ended December 31, 2014.
“As we begin 2015, we believe FalconStor is well positioned for success. Next week we are announcing the availability of our new offering, FreeStor,™ which addresses the all-flash array and cloud markets with a horizontal approach to data management, along with a disruptive subscription pricing model. Feedback from customers, partners and prospects in support of our new image and message #BEFREE has been very encouraging,” said Gary Quinn, FalconStor President and CEO. “As we have indicated before, the path to growth and profitability will not be a straight line. We believe that throughout 2015, we will measure our success by the partnerships we can deliver within, the all-flash array community, the hybrid/private cloud service providers, and those large enterprise customers who are looking to take back control of their storage infrastructure. During 2014, we were pleased with the strong performance in EMEA from an execution and revenue perspective, although 2015 could bring us some headwinds. Our Asia and Japan business finished 2014 in position to take advantage of our new marketing initiatives and new product deliverables. Finally, the US and Canada markets were better in Q4 2014, but still need improvements for 2015. We remain optimistic for the coming year which is our 15th year of innovation.”
Financial and Business Highlights and Overview:
Total revenues for the fourth quarter of 2014 were $11.8 million compared with $14.7 million in the same period a year ago. GAAP loss from operations for the fourth quarter of 2014 was $2.3 million, compared with an operating loss of $1.0 million for the fourth quarter of 2013. Included in the operating results for the three months ended December 31, 2014 and 2013 were; (i) a benefit of $0.2 million and an expense of $0.1 million, respectively, of investigation, litigation and settlement related costs; (ii) $0.3 million and $0.4 million, respectively, of share-based compensation expense; and (iii) $0.1 million and $1.3 million, respectively, of restructuring costs. GAAP net loss for the quarter was $2.5 million compared with net income of $0.9 million for the same period a year ago. Included in our net (loss) income for both the three months ended December 31, 2014 and 2013 was an income tax provision of less than $0.1 million. Net loss attributable to common stockholders for the quarter, which includes the effects of the accretion to redemption value of the Series A redeemable convertible preferred stock and the accrual of preferred stock dividends, was $2.8 million, or $0.06 per share, compared with income of $0.6 million, or $0.01 per share, for the same period a year ago.
Non-GAAP loss from operations was $2.2 million for the fourth quarter of 2014, compared with non-GAAP income from operations of $0.8 million for the same period a year ago. Non-GAAP net loss was $2.4 million, or $0.05 per share, in the fourth quarter of 2014, compared with non-GAAP net income of $0.6 million, or $0.01 per share, in the fourth quarter of 2013. Non-GAAP results exclude the effects of stock-based compensation, costs associated with the Company’s investigations, litigation and settlement related costs, restructuring costs, certain tax items and the effects of our Series A redeemable convertible preferred stock.
Total revenues for the year ended December 31, 2014 were $46.3 million compared with $58.6 million in the same period a year ago. GAAP loss from operations for the year ended December 31, 2014 was $6.1 million, compared with an operating loss of $13.6 million for the year ended December 31, 2013. Included in the operating results for the year ended December 31, 2014 and 2013 were; (i) a benefit of $5.4 million and an expense of $0.4 million, respectively, of investigation, litigation and settlement related costs; (ii) $1.5 million and $1.7 million, respectively, of share-based compensation expense; and (iii) $1.1 million and $3.6 million, respectively, of restructuring costs. GAAP net loss for the year ended December 31, 2014 was $7.2 million compared with $10.9 million for the same period a year ago. Included in our net loss for the year ended December 31, 2014 was an income tax provision of $0.5 million, compared with an income tax benefit of $1.6 million for the year ended December 31, 2013. Net loss attributable to common stockholders for the year ended December 31, 2014, was $8.5 million, or $0.18 per share, compared with $11.3 million, or $0.24 per share, for the same period a year ago.
Non-GAAP loss from operations was $8.9 million for the year ended December 31, 2014, compared with non-GAAP loss from operations of $7.9 million for the same period a year ago. Non-GAAP net loss was $10.0 million, or $0.22 per share, for the year ended December 31, 2014, compared with a non-GAAP net loss of $9.5 million, or $0.20 per share, for the same period a year ago.
The Company closed the quarter with $21.8 million in cash, cash equivalents and marketable securities. Cash flow provided by operations for the three months ended December 31, 2014 was $0.5 million compared with cash used in operations of $3.6 million during the same period in 2013. Deferred revenue at December 31, 2014 was $36.5 million, compared with $29.8 million at December 31, 2013.
The Company will host a conference call to discuss its financial results on Thursday, February 12, 2015 at 4:30 p.m. EST. To participate in the conference call, please dial:
Toll Free: 1-888-631-3392
Conference ID: 8100193
To view the presentation, please copy and paste the following link into your browser and register for this meeting. Once you have registered for the meeting, you will receive an email message confirming your registration.
Meeting: FalconStor Q4 2014 Earnings
Meeting password: Q4numbers14
Meeting Number: 763170094
If you are unable to register via the Internet, please contact Melissa Keir, Investor Relations at 631-773-4334 or firstname.lastname@example.org .
A conference call replay will be available beginning February 12 at 7:30 p.m. EST through 7:30 p.m. EST on February 19. To listen to the replay of the call, dial toll free: 1-888-203-1112 or International: +1-719-457-0820, passcode: 8100193.
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) costs associated with the Company’s class action and derivative lawsuits, government investigations, and related legal fees, (ii) restructuring costs, (iii) effects of our Series A redeemable convertible preferred stock, (iv) impact of the tax benefits realized from the reversal of uncertain tax positions due to the expiration of applicable statutes of limitations and (v) noncash stock-based compensation charges and any potential tax effects. For a reconciliation of our GAAP and non-GAAP financial results, please refer to our Non-GAAP Operating Data GAAP Reconciliation, presented in this release.
About FalconStor Software
FalconStor Software, Inc. (NASDAQ: FALC) is transforming how enterprises move, store, protect and optimize data. Founded in 2000, FalconStor offers an award-winning platform for data migration, business continuity, disaster recovery, optimized backup and deduplication. FalconStor helps maximize data availability and system uptime to ensure nonstop business productivity, while simplifying data management to reduce operational costs. Our open, integrated software solutions reduce vendor lock-in and give enterprises the freedom to choose the applications and hardware components that make the best sense for their business. FalconStor solutions are available and supported by OEMs, as well as leading system integrators and resellers worldwide. FalconStor is headquartered in Melville, N.Y. with offices throughout Europe and the Asia Pacific region. For more information, visit www.falconstor.com or call 1-866-NOW-FALC (866-669-3252).
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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 data protection industry; competition in the data protection market; results and costs associated with governmental investigations; 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 FalconStor Software are 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.
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