MELVILLE, N.Y., April 22, 2015 — FalconStor Software , Inc. (NASDAQ: FALC), a market leader in software-defined storage, today announced financial results for its first quarter ended March 31, 2015.
“During the first quarter of 2015, the FalconStor team accomplished many of the goals which it had set out for itself. We released new technology that enabled customers to modernize their storage infrastructure. We reinvigorated our position in the marketplace with the introduction of FreeStor™ through a global public relations campaign while continuing the drumbeat of #BEFREE,” said Gary Quinn, FalconStor President and CEO. “We saw bookings in both of our international geographies which exceeded or equaled our internal projections even with currency headwinds in Europe and Japan. We have already seen significant progress in installations of our new products by new and existing customers. This quick adoption is a key indicator, as our sales cycle is typically longer than one-quarter. We believe that throughout 2015, we will measure our success by the partnerships we deliver within the all-flash array community, hybrid/private cloud service providers, and large enterprise customers. We are proud to announce that we have finalized three OEM relationships, who trust their business to the FreeStor technology, using either their private-labeled brand or the FalconStor brand. As we continue to improve on our execution, we are also delivering on our vision to simplify storage environments at maximum overall value, and have multiple indicators showing FalconStor is on the right path for growth.”
Financial and Business Highlights and Overview:
Total revenue for the first quarter of 2015 was $19.9 million compared with $12.0 million in the same period a year ago. Included in total revenue for the first quarter of 2015 was $11.3 million of revenue associated with our joint-development agreement, of which $9.9 million was accelerated during the first quarter. GAAP income from operations for the first quarter of 2015 was $6.4 million, compared with an operating loss of $2.6 million for the first quarter of 2014. Included in the operating results for the three months ended March 31, 2015 and 2014 were; (i) expense of less than $0.1 million and $0.1 million, respectively, of investigation, litigation and settlement related costs; (ii) $0.4 million for both periods of share-based compensation expense; and (iii) $0.1 million and $0.2 million, respectively, of restructuring costs. GAAP net income for the quarter was $5.3 million compared with a net loss of $2.8 million for the same period a year ago. Included in our net income (loss) for the three months ended March 31, 2015 and 2014 was an income tax provision of $0.6 million and $0.2 million, respectively. GAAP net income attributable to common stockholders for the first quarter of 2015, which includes the effects of the accretion to redemption value of the Series A redeemable convertible preferred stock and the accrual of Series A redeemable convertible preferred stock dividends, was $4.9 million, or $0.10 per diluted share, compared with a loss of $3.1 million, or $0.06 per diluted share, for the same period a year ago.
Non-GAAP income from operations was $6.9 million for the first quarter of 2015, compared with a non-GAAP loss from operations of $1.9 million for the same period a year ago. Non-GAAP net income was $5.8 million, or $0.11 per diluted share, in the first quarter of 2015, compared with a non-GAAP net loss of $2.1 million, or $0.04 per diluted share, in the first quarter of 2014. Non-GAAP results exclude the effects of stock-based compensation, costs associated with the Company’s investigations, litigation and settlement related costs, restructuring costs and the effects of our Series A redeemable convertible preferred stock.
The Company closed the quarter with $21.0 million in cash, cash equivalents and marketable securities. Cash flow used in operations for the three months ended March 31, 2015 was $0.3 million compared with cash provided by operations of $0.3 million during the same period in 2014. Deferred revenue at March 31, 2015 was $26.7 million, compared with $31.9 million at March 31, 2014.
The Company will host a conference call to discuss its financial results on Wednesday, April 22, 2015 at 4:30 p.m. EDT. To participate in the conference call, please dial:
Toll Free: 1-800-289-0468
Conference ID: 5028885
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 Q1 2015 Earnings
Meeting password: Q1numbers15
Meeting Number: 761 156 627
If you are unable to register via the Internet, please contact Melissa Keir, Investor Relations at 631-773-4334 or email@example.com .
A conference call replay will be available beginning April 22 at 7:30 p.m. EDT through 7:30 p.m. EDT on April 29. To listen to the replay of the call, dial toll free: 1-888-203-1112 or International: +1-719-457-0820, passcode: 5028885.
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, and (iv) 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 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, FalconStor Software and FreeStor 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.
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.