EXHIBIT 99.1
Contacts: Herman Chin Christine Rogers
Public Relations Investor Relations
631-962-1163 631-962-1160
herman.chin@falconstor.com christine.rogers@falconstor.com
FALCONSTOR ANNOUNCES FIRST QUARTER FINANCIAL RESULTS
REVENUES INCREASE 60% FROM SAME PERIOD A YEAR AGO;
BREAKEVEN ON AN EPS BASIS
MELVILLE, N.Y., April 27, 2005--FalconStor Software, Inc. (Nasdaq: FALC), a
leading provider of network storage software solutions, today announced its
financial results for the first quarter ended March 31, 2005.
For the first quarter of 2005, revenues increased 60% to $8.4 million, compared
with $5.3 million for the same period a year ago. Operating expenses increased
13% from $7.7 million in Q1 2004 to $8.7 million in Q1 2005. The Company broke
even on a diluted net loss per share basis compared with a diluted net loss per
share of $0.05 for the same period a year ago. Net loss for the quarter was $0.1
million compared with a net loss of $2.2 million for the first quarter of 2004.
Deferred revenue increased 86% from $3.3 million at the end of the first quarter
2004 to $6.1 million at the end of the first quarter 2005. The Company generated
$0.9 million in cash from operations and repurchased 125,000 shares during the
first quarter at an aggregate cost of $0.9 million. Cash, cash equivalents and
marketable securities decreased $0.2 million from $34 million as of December 31,
2004 to $33.8 million as of March 31, 2005.
"In addition to the increase in GAAP revenues, the growth of deferred revenues
reflects the faith of IT managers in our technology road map and in our ability
to support their mission-critical businesses," said ReiJane Huai, Chairman and
CEO of FalconStor Software. "We believe the solid foundation we have
established, along with continued investment in R&D, Support Infrastructure and
Channel Development will enable the further expansion of our channel and OEM
business."
RECENT HIGHLIGHTS:
FalconStor continues to sign new customers for its network storage solutions,
receive industry recognition for its channel efforts, and advance its product
portfolio.
o FalconStor continued to receive accolades from leading industry
publications, including recognition by the editors of CMP Media's
VARBusiness magazine as one of North America's top information-technology
vendors. FalconStor received a Five-Star Rating, acknowledging the robust
features of its programs for IT integrators, resellers and consultants,
and Wendy Petty, FalconStor vice president of sales, was named one of
North America's "Top 75 Executives" for IT distribution channels. CMP
Media's GovernmentVAR magazine included Tom Schmit, FalconStor sales
director, public sector, as part of its "2005 Government Execs - 10 to
Watch." This coincided with FalconStor's launch of its Federal Business
Partner Program.
o FalconStor started shipping the next generation of its iSCSI Storage
Server software solution built on Microsoft Windows Storage Server 2003,
providing comprehensive disaster recovery, superior disk-based backup and
rapid data restore to Windows customers. The Company also announced that
its flagship software product, IPStor(R) Enterprise Edition, fully
supports and leverages the Cisco MDS 9000 Series SANTap Service to deliver
network assisted storage services, such as continuous data protection and
replication, backup consolidation and acceleration, and data migration and
cloning, to optimize the availability of mission-critical applications.
o FalconStor further cultivated its relationships with solutions integrators
worldwide, including Advanced Technology and Systems Co., Ltd. (ADTX),
based in Japan, which extended its existing OEM partnership with
FalconStor by introducing its new VT-AN400 Series, powered by FalconStor's
VirtualTape Library solution; and eSeSIX Computer GmbH, a leading storage
reseller and distributor based in Pfaffenhofen, which is offering turnkey
appliances, powered by FalconStor's IPStor software, delivering
intelligent backup and rapid recovery services in Germany.
o New customers from the financial, healthcare, legal and telecommunications
sectors continued to select FalconStor solutions for continuous protection
and availability of mission-critical data. Key customers announced in the
first quarter included: SD WORX, Belgium's leading payroll processing
company; Roche Diagnostics GmbH, a world leader in in-vitro diagnostics;
Styrian Hospitals Authority Ltd. (KAGes); Addleshaw Goddard, a leading UK
law practice; and Cable & Wireless, a leading global telecommunications
company.
The company will host a conference call on Wednesday, April 27th at 4:30 p.m.
Eastern Time, to discuss the results. To participate in the call, dial toll
free: 800-366-7417 or International: 303-262-2193. To view the presentation,
please copy and paste the following link into your browser:
https://falconstor.webex.com/falconstor/j.php?ED=85739507&UID=29798062
Follow the instructions to register and join this meeting.
Meeting Name: FalconStor Q1 2005 Earnings
Meeting password: ipstor
Meeting number: 764 711 793
A conference call replay will be available beginning 4/27 at 6:30 PM ET through
6:30 PM on 4/28. To listen to the replay of the call, dial toll free:
800-405-2236 or International: 303-590-3000, passcode: 11028096#, or visit our
website at www.falconstor.com/investors.asp.
ABOUT FALCONSTOR
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
2
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.
FALCONSTOR SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2005 2004
----------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents ......................... $17,335,370 $15,484,573
Marketable securities ............................. 16,481,269 18,488,616
Accounts receivable, net .......................... 10,203,302 10,269,822
Prepaid expenses and other current assets ......... 764,320 629,036
----------- -----------
Total current assets ..................... 44,784,261 44,872,047
----------- -----------
Property and equipment, net .......................... 4,592,827 4,662,269
Goodwill ............................................. 3,512,796 3,512,796
Other intangible assets, net ......................... 274,465 307,620
Other assets ......................................... 2,385,584 2,719,460
----------- -----------
Total assets ............................. $55,549,933 $56,074,192
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................. $ 748,049 $ 821,433
Accrued expenses .................................. 3,100,726 3,501,034
Deferred revenue .................................. 4,831,781 4,097,279
----------- -----------
Total current liabilities ................ 8,680,556 8,419,746
Deferred revenue ..................................... 1,291,315 1,290,496
----------- -----------
Total liabilities ........................ 9,971,871 9,710,242
----------- -----------
Commitments
Total stockholders' equity ............... 45,578,062 46,363,950
----------- -----------
Total liabilities and stockholders' equity $55,549,933 $56,074,192
=========== ===========
4
FALCONSTOR SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
--------------------------------
2005 2004
(unaudited) (unaudited)
----------- -----------
Revenues:
Software license revenue............................................. $ 6,282,509 $ 3,547,831
Maintenance revenue.................................................. 1,530,174 821,853
Software services and other revenue.................................. 579,353 889,114
----------- -----------
8,392,036 5,258,798
----------- -----------
Operating expenses:
Amortization of purchased and capitalized software................... 222,583 415,048
Cost of software services and other revenue.......................... 1,327,217 978,005
Software development costs........................................... 2,667,391 2,161,916
Selling and marketing................................................ 3,505,219 3,313,538
General and administrative........................................... 986,026 810,643
----------- ------------
8,708,436 7,679,150
----------- ------------
Operating loss............................................ (316,400) (2,420,352)
----------- ------------
Interest and other income............................................ 186,586 202,925
----------- ------------
Loss before income taxes............................................. (129,814) (2,217,427)
----------- ------------
Provision for income taxes........................................... 4,015 4,080
----------- ------------
Net loss............................................................. $ (133,829) $ (2,221,507)
============ =============
Basic and diluted net loss per share................................. $ (0.00) $ (0.05)
============ =============
Weighted average basic and diluted shares
outstanding.......................................................... 47,528,874 46,638,740
============ ============
