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2018 Press Releases

May 15, 2018

FalconStor Revenue Decline Continues Q1 2018 Results Do Not Make Happy Reading

Notes from DSA Editor: Let's start by saying by saying we like FalconStor at DSA, the people in-region are well informed and professional and the company history is strong. They are in the software-defined storage market which has massive potential, but with the exception of VMware the market seems to be moving away from ISVs that add software definition over the top of the storage vendors, and that may be where FalconStor's problems may lie.

To put these latest results in perspective, they are now heading for a $20million dollar annual revenue figure in 2018, which will be a big decline from last year and from a company who just a few years ago had revenues of over $80million. (We have given there annual revenue going back to 2008 below)

The market has moved fast, and it is starting to look like FalconStor has placed the wrong bets in where it has taken its tech. The problem now is that the slide seems unstoppable, revenue decline with profitability indicates underinvestment. If spending is down, you have to wonder how a smaller team with less resource is going to sell there way out of this decline. 

We hope they find a way, but we just can't see it, perhaps the best future is to find a buyer that can leverage the great people and integrate the tech into a wider, larger and ultimately more relevant offering.

Press Release follows:

MELVILLE, N.Y., May 10, 2018 — FalconStor Software, Inc. (OTCQB: FALC), a market leader in storage software, today announced financial results for its first quarter ended March 31, 2018.

“We are pleased with our Q1 performance and resultant financial results, which continued the return to profitability delivered in Q3 and Q4 of 2017” stated Todd Brooks, CEO of FalconStor.  “Our products play a key role in efficiently managing and protecting critical data within enterprises around the world.  Given our improved financial stability and continually improving operational efforts, our focus for the balance of 2018 will shift to further product innovation and strategic growth.”

Financial Overview:

For the three months ended March 31, 2018 we delivered net GAAP operating income of $0.6 million on revenues of $5.0 million.  Included in operating results above for the three months ended March 31, 2018 and 2017 were $0.0 million and $0.4 million of share-based compensation expense, respectively.

Deferred revenue at March 31, 2018 was $13.1 million, compared with $18.4 million at December 31, 2017. The decrease is primarily related to our adoption of new revenue recognition accounting guidance on January 1, 2018 using the modified retrospective transition method applied to contracts which were not completed as of January 1, 2018. Our cash balance at March 31, 2018 was $4.6 million, compared with $1.0 million at December 31, 2017.

Non-GAAP results exclude the effects of stock-based compensation, restructuring costs and the effects of our Series A redeemable convertible preferred stock