| Contact: | Joanne Ferrara, Investor Relations |
| | 631-773-5813 |
| | joanne.ferrara@falconstor.com |
FalconStor Software Reports Fourth Quarter and Full Year Financial Results
MELVILLE, N.Y., March 13, 2012—FalconStor Software, Inc. (NASDAQ: FALC), the provider of disk-based data protection solutions, today announced financial results for its fourth quarter and full year ended December 31, 2011.
“We are very pleased that we exceeded $25.0 million in total revenue for Q4 2011, an increase of over $6.5 million, or 35% from Q3 2011,” said Jim McNiel, president and CEO of FalconStor Software. “This reflects continued growth and momentum in our business and the markets we serve.”
For the year ended December 31, 2011, revenues increased to $82.9 million, compared with $82.8 million for the same period a year ago. GAAP loss from operations for 2011 was $22.2 million compared with a loss from operations of $17.6 million in 2010. GAAP net loss was $23.4 million, or $0.50 per share for 2011 compared with a net loss of $35.4 million, or $0.78 per share in 2010. The 2011 and 2010 results include $10.3 million and $1.6 million, respectively, of costs associated with the ongoing government investigations. The $10.3 million of costs incurred in 2011 was comprised of $2.8 million in legal fees, and an accrual of $7.5 million for certain costs associated with the possible resolution of the government investigations. The $1.6 million of costs incurred in 2010 was comprised of legal fees. Additionally, the 2010 results included a $16.3 million valuation allowance within the tax provision.
Non-GAAP loss from operations in 2011 was $5.6 million compared with Non-GAAP loss from operations of $7.3 million in 2010. Non-GAAP net loss was $6.8 million, or $0.15 per share in 2011, compared with Non-GAAP net loss of $24.3 million or $0.54 per share in 2010. Non-GAAP results exclude the effects of costs associated with the ongoing government investigations, stock-based compensation net of the related income taxes and restructuring costs, when applicable.
Total revenues for the fourth quarter of 2011 were $25.4 million, a decrease of 4% compared with $26.5 million in the same period a year ago. GAAP loss from operations for the fourth quarter of 2011 was $5.5 million, compared with income from operations of $0.8 million for the same period a year ago. GAAP net loss for the quarter was $6.1 million, or $0.13 per share compared with a net loss of $0.1 million with breakeven earnings per share for the same period a year ago. Included in the operating results for the fourth quarter of 2011 and 2010 was $5.9 million and $1.6 million, respectively, of costs associated with the ongoing government investigations. The $5.9 million of costs incurred during the fourth quarter of 2011 was comprised of $0.6 million in legal fees, and an accrual of $5.3 million for certain costs associated with the possible resolution of the government investigations. The $1.6 million of costs incurred during the fourth quarter of 2010 was comprised of legal fees.
Non-GAAP income from operations was $1.9 million in the fourth quarter of 2011, compared with Non-GAAP income from operations of $4.0 million for the same period a year ago. Non-GAAP net income was $1.2 million, or $0.03 per diluted share in the fourth quarter of 2011, compared with Non-GAAP net income of $3.8 million, or $0.08 per diluted share, in the fourth quarter of 2010. Non-GAAP results exclude the effects of costs associated with the ongoing government investigations, stock-based compensation net of the related income taxes and restructuring costs, when applicable.
The Company closed the year with $37.8 million in cash, cash equivalents, and marketable securities, up $0.4 million from December 2010. Cash flow from operations for the fourth quarter of 2011 was $1.5 million, and for the full year 2011 cash flow from operations was $3.1 million. Deferred revenue at December 31, 2011 was $27.1 million, an increase of 15% compared with the same period a year ago.
“Throughout 2011 we focused on our core mission of delivering leading-edge data protection solutions to our customers while strengthening our strategic alliances and channel partner relationships,” said Jim McNiel, president and CEO of FalconStor Software. “Deepening partnerships with top-tier storage vendors, including HDS, HP, and Fujitsu, validated our technology and enhanced our market presence, setting the stage for greater sales opportunity. Further validation of our strength in migration comes from our newly announced partnership with Dell. With proven solutions that meet the sophisticated needs of today’s data center, FalconStor is poised for continued leadership and growth.”
The Company will host a conference call to discuss its financial results on Tuesday, March 13, 2012 at 4:30 p.m. EDT. To participate in the conference call, please dial:
Toll Free: 1-877-941-9205
International: 1-480-629-9645
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.
https://falconstor.webex.com/falconstor/j.php?ED=162696472&RG=1&UID=1090833662
Meeting: FalconStor Q4 2011 Earnings
Meeting password: q4numbers
Meeting Number: 762 993 088
If you are unable to register via the Internet, please contact Joanne Ferrara, Investor Relations at 631-773-5813 or joanne.ferrara@falconstor.com.
A conference call replay is scheduled to be available beginning March 13 at 6:30 p.m. EDT through 11:59 p.m. EDT on March 16. To listen to the replay of the call, dial toll free: 1-800-406-7325 or International: +1-303-590-3030, passcode: 4515626, or visit our website at www.falconstor.com/investors.
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 ongoing government investigations, (ii) noncash stock-based compensation charges and any potential tax effects, and (iii) restructuring costs for all periods presented, when applicable. 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
FalconStor Software, Inc. (NASDAQ: FALC) is the market leader in disk-based data protection. The company’s mission is to transform traditional backup and disaster recovery (DR) into next-generation service-oriented data protection. Built upon an award-winning platform, FalconStor solutions deliver disk-based backup, continuous data protection, WAN-optimized replication and DR automation. FalconStor solutions are available through a worldwide network of partners, including solution providers, top-tier strategic partners and major OEMs. Thousands of customers worldwide, from small businesses to Fortune 100 enterprises, entrust their data to FalconStor solutions. FalconStor maintains headquarters in Melville, N.Y., and 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 US and other countries. All other company and product names contained herein may be trademarks of their respective holders.
FalconStor Software, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | December 31, | | | December 31, | |
| | | (unaudited) | | |
| Assets | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 16,257,694 | | | $ | 17,842,555 | |
| Marketable securities | | | 20,894,328 | | | | 18,903,635 | |
| Accounts receivable, net | | | 19,314,789 | | | | 23,286,660 | |
| Prepaid expenses and other current assets | | | 1,912,831 | | | | 1,576,213 | |
| Inventory | | | 1,769,007 | | | | 1,409,659 | |
| Deferred tax assets, net | | | 177,798 | | | | -- | |
| | | | | | | | | |
| Total current assets | | | 60,326,447 | | | | 63,018,722 | |
| | | | | | | | | |
| Property and equipment, net | | | 4,364,180 | | | | 5,796,013 | |
| Long-term marketable securities | | | 611,082 | | | | 578,643 | |
| Deferred tax assets, net | | | 217,771 | | | | 235,197 | |
| Software development costs, net | | | 1,001,530 | | | | 140,832 | |
| Other assets, net | | | 2,183,973 | | | | 2,238,393 | |
| Goodwill | | | 4,150,339 | | | | 4,150,339 | |
| Other intangible assets, net | | | 191,572 | | | | 387,222 | |
| | | | | | | | | |
| Total assets | | $ | 73,046,894 | | | $ | 76,545,361 | |
| | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 2,883,844 | | | $ | 1,455,013 | |
| Accrued expenses | | | 17,609,766 | | | | 9,109,424 | |
| Deferred revenue, net | | | 19,450,966 | | | | 16,979,455 | |
| | | | | | | | | |
| Total current liabilities | | | 39,944,576 | | | | 27,543,892 | |
| | | | | | | | | |
| Other long-term liabilities | | | 2,587,327 | | | | 2,507,169 | |
| Deferred revenue, net | | | 7,698,053 | | | | 6,555,437 | |
| | | | | | | | | |
| Total liabilities | | | 50,229,956 | | | | 36,606,498 | |
| | | | | | | | | |
| Commitments and Contingencies | | | | | | | | |
| | | | | | | | | |
| Total stockholders' equity | | | 22,816,938 | | | | 39,938,863 | |
| | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 73,046,894 | | | $ | 76,545,361 | |
