FALC - Earnings call transcript Q3 2017 | FalconStor Software, Inc.

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Operator

Good afternoon and thank you for joining us to discuss FalconStor Software's Q3, 2017 Earnings Call. Todd Brooks, FalconStor's Chief Executive Officer; and Patrick McClain, Chief Financial Officer will discuss the company's results and activities and we'll then open the call to your questions. The company would like to advise all participants that today's discussion may contain what some consider forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties are discussed in FalconStor's reports on Forms 10-K, 10-Q, and other reports filed with the Securities and Exchange Commission and in the company's press release issued today.

will that there non-GAAP call, today's be include discussions results. During to of www.falconstor.com, been the reconciliation GAAP under non-GAAP Relations”. at A website results has FalconStor's posted “Investor on XXXX business released close today, the of its After QX, earnings. FalconStor Copies of financial available FalconStor's on and at information www.falconstor.com. are website earnings the release supplemental to am I over pleased turn to Brooks. now call the Todd

Todd Brooks

we’ve our Pat you, Appreciate your taking those I’s had us our joining are lead of since a company rebuilding the appreciate time we’ve call René. joining companies working introduction, you amount of careers And both that call the pleasure Thank enterprise significant of today, time. to in FalconStor. your first mature first earnings mid-August. portions and and is significant This like that spent and and to earnings I all

XXXX. excited storied As looking been a to have result are a since we history this its long opportunity, and FalconStor specifically by in today’s has and call. forward both launch

a deliver managing Our while solution role organizations certainly its to still company the sincere has world. that several it’s view base. and within to and data the my struggled products large has years, play excel protecting the the And critical long-term FalconStor last value around and valuable over shareholder opportunity in

Over on the journey, four this last focused three months, we’ve key been to begin initiatives.

that vision First, on on assembling the talents and with strategic the a is and needed long-term that leadership execute vision. team our experience to aligned

and on focused customers’ within fourth, been enable we’ve And basis a that re-engaging have success needed we’ve been company. a on we end clear on expense that been financing the to on finally, value third, partner of profitable the our the of so we’ve Second, organizations. securing long-term forward; operating to our FalconStor deliver products our understanding user global focused with we going base ensure adjusting foundation are focused

I’ll and also turn of more $X of of initiatives for Pat bit it each secured review Capital. then a balance financial brief these of I over will detailed today’s a then the results more, a for we key the four commitment and to Hale So call, review just elaborate with financing on million QX

more back initiatives, first the So -- those, a the on leadership little key four assembling on on team. to color give to the

First has our my August, leading on, included the Pat in were enterprise and had like a to our of Carter Carter earlier Global to and Revenue presales accomplished roles and in McCrary, addition Dell add latter we August. appointments other part VP extensive with which in back of excited our has sales teams. several is Carter very companies. leadership organizations career, executive software as

are to our appointments drivers, operates objectives. against success set aggressively improve be productivity, for will announce we pursues a FalconStor. works our in of leadership key operating of leaders corporate executive excited this Engineering year, a our about team, These that drivers are are organization set clear of at the that. actually which to deliver to against disciplined to These key-- out expect one to before end future continually round our metrics, we VP new key so transitioning Next, instrumental processes,

net probably, Next with optimizing most in year, quarter. this let’s income I XXXX $X.X in foundation. in a that earlier the a included in included done recent strategic this loss restructuring dive sharp which bit profitable in ensure have is today, deliver FalconStor The will QX a progress additional QX million expense in team this efforts into performance, the deliver a quarter our to expense $XXX,XXX we operating and say base a of would QX update our is year, loss that we of this has what made have $X.X base, little for XXXX. all of exciting the then and to launched and loss this of a million $XXX,XXX contrast in a our during produced as we more return sharp, that quarter. probably, implemented we’ve not to And definitely profitability excess non-GAAP

for our we time While sets though it this be, ways the additional to to company foundation and base continue growth. company for you clear. our reengage if is base, very optimize retention, gives runway to to to profitable the position I for and do look be a pause for moment I performance. The stabilize expense adjusted will QX, in future revenue up want continued customer as though us critical, or want

A installed minute engaging earnings regarding expense the a retention creating also a driven our resultant simply quarterly minute. just base, in base. a ideally they QX obviously, experience, operating flow positive dive installed cash detail and no from business stable growth. good on step, we’re cash remains flow. mature profitable foundation. an additional discuss a work commercial bookings This customers FalconStor result to we our revenue when products. of decision-makers value but is utilizing financial first by when some create these and time of our significant enterprise million are can partners, to receive QX While It by provide in key companies In only commitment, focus. stability existing will immediate profits a Pat significant thirdly, into existing is initiatives, returning that. This software dynamics base with my that into a spending amount and our doubt about focused here the stable uncover $X he’ll year-over-year to to Back translate requires

as a Europe, spent QX face-to-face with firsthand base, continue and meeting this installed an have Asia, customers we several extensive we America. witnessed North across during weeks we to and Fortunately,

to and is was as time issues all vision for message first message relationships, we some there continue as frankly will was our products. that And While discuss can, we the to message FalconStor several they from with taking finally, long-term because uncover demonstrate we are addressing they years.” relationship with our said, did thank can to your consistent clean your limited if we’ve quite our from you, product stability, to and Secondly, up with willing partners our meet expanding of consider believe heard more you and And their in of quality customers. fast received that us, their are they was we over us, last a currently little their products. than we the that use that “thank FalconStor

we very So that by we progress in QX. the obviously made encouraged are

publicly company, additional a announced available As commitment final to an past pursuit to Capital. more have we financing discuss disclosed also little it over multiple around occasions you a the of I’ll all we a results. to give After commitment million step viability Friday of $X to extensive of QX to Pat? the from this Pat details detail raise this options, Hale on and long-term financing. ensure turn need

Patrick McClain

Thank you, Todd.

for operating mentioned, the income represents the financial delivery which was Todd operating As the an million margin. in highlight quarter non-GAAP XX% of $X.X

did million continue $X.X a quarter quarterly $X.X $X.X the to revenues at also closed against X%. million as we decline decline for Bookings QX. Our lower at of trended million, representing

margin quarter. reductions XX% and This we commercial stabilize re-engage is refocused Gross our that to QX, next is mix. to cost quarters and from strategy. and our the increase attributable base will revenue resulting over product as expectation increased the Our in previous few bookings implement customer XX%

initiatives, million and XXXX. our expenses which operating As an million, $X.X million improvement cost a at control were QX result non-GAAP QX and $X of realignment $X.X our representing ended of over over

of balance a we the Now the sheet, balance $X.X cash QX. from slightly up with the ended turning end of at quarter $X.X million, to nearly million

net over at $X and working deferred million previous down additional However, receivable putting ended at on QX, revenue million excluding $X.X which in $X.X the million at Accounts $X.X ended cash by expenses from the the end from accrued with pressure Accounts fourth coming fourth-quarter was a negative due flows. $X.X capital $XXX,XXX payable down million million quarter. in ended of quarter.

As to principal Friday the financing foundation we and this terms received a our been filings the press create Capital cash solid Hale release on the filed we and of in in have actively X-K meet we SEC we seeking commitment we set discussed in can morning. flows ensure forth with operating The financial financing. are that we future, for issued from previous

with of back our it support you turn Todd, continued are to Hale’s I’ll efforts. comments. We for pleased your final

Todd Brooks

customers extremely of marks do to believe Pat. Pat are said, the lot Thanks been work that pleased. we of point has for but a a and There And hard significant us, our that committed delivering summary we to industry in undertaken we rightful certainly coming the of shareholders, QX those QX In we customers, work ahead that of look position company. a as we’ve pivot in value have amount returning even we potentially the are forward the to that are to loyal to you shareholders our and -- FalconStor days. very to and to its on in and phone and

now so second will going that so the submitted, being didn’t this we we of I’m René and just open through first to any did intentionally up floor that René back Q&A. to turn Q&A, of the we questions left might over from of press but that in the one René, sure for that it second, to in plenty want our a make And We call time in. for for we’ve now detail release have read lot a

Operator

from take Rubenstein Barry Wheatley we’ll question [Operator Instructions] And with our first Partners.

Barry Rubenstein

there, and could you hopefully continue this we guys, glad Hi to I’m see positiveness.

I of a Hale the and Capital’s from funding you out Capital on in things? other and on, in, figuring funding XX had coming part, total and and any [ph] shareholders that’s about is tried there’s what that can buying participating, to going shareholders those something of tough On the XX% time XX.XX other million I funding, clarify exactly release decipher participating the out million Hale

Patrick McClain

Yes.

least to and The Hale a the is placement. million investors the backstop to to a there private for currently $X bit $X his Hale shareholder with a and $X million. cap selling will participate of the me placement the has reserved million the an at are a have transaction. so be opportunity of did -- investor purchase Hale funding, the as well guaranteed XX% $X as of company guaranteed million, help million from company component is so shares is Capital The There involves good private of we company try That’s holds, of Hale XX% for the preferred backstop. little an that. X be worth the news course million. will What is other Let in the the offering, funds that of with have $X that Hale. is

Todd Brooks

details good did , too participate that that and we that shortly, know give information one complete offline wanted happy into this get a release we be It to make to not more or opportunity some try there inquire, call, to question, chat so we some with that I but question on the we when like you though. was to that best additional probably released to anyone it’s sure but an other is else we good of details believe that I’d things to would folks additional will

Operator

question Dawkins [Operator Instructions] with Burleson from next Incorporated. And Dawkins our Bill comes

Bill Dawkins

guys. afternoon, Good

Todd Brooks

Bill. afternoon, Good

Bill Dawkins

start to that. it did saying you both did job by I you it out; wanted was I on appreciate very wonderful explaining well I thought that -- a all a of and done

Todd Brooks

Well Bill. thank you,

Bill Dawkins

I front when guess have of you here look your world in you partners question what’s across all size at talking, market we’re is, of do the you? my theoretically

Todd Brooks

Well, Bill. question a great

grow is is of product, by questions focused the right. simply because within don’t our question our fantastic again. is the day even market plan initially to is a innovations are and disposal, is mature software we about easy just -- and what do and was and us with – are before tremendous billion the called be not this, value is, our shareholders, asset roadmap, what been partners our how what on past at on more to it going our customers company the touch the deliver or a planning the customers, you about to $XX how innovate. market that get billion you a whether to $X my commonly are installed numbers, to is but that, or and talking there’s in very increase when is this opportunity thinking I companies Bill, back there or And base. a tie our with in you set do a bunch I’m to What That’s do the we roadmap how from to focus attempt installed for roadmap response in my to your is one on base, strategic my getting one clients that. and throw know here’s only and a on happens to question, company, strategic industry partners, it would And have but we experience You worry existing to to it another we out of that opinion stability talking

install to simply and will laser and for have we’re begin but we’ll that, you you I your to base, that’s become focus As listen to your begin for drive outside more plenty you what to our and just territory there’s because installed right. don’t would roadmap partners the you right to of growth there have base And understand will your company discussions, this and as listen as an on our on of customers then on our you room -- focus now. for answer if focused value, today clear, totally

Bill Dawkins

stacks can Well, out competition against there? how up product comment the this you on

Todd Brooks

one not it stable. our through to another customers. FalconStor, again, FalconStor. as begin alternative as please in of heard product plugging what we themes them. can some perspective because two went in cases just have And show is, to the to the view we if In unplug I we it’s many I on at provide theme the Well, to that of vendor. to plug as three please that we grow replace comment very please alternative have stability or recurring on don’t, easy to is general, begin we recurring from it’s My vendors in talk

or and differentiation the across we from having issue there we marketplace. quality customers our the differentiation that run runway believe to product one is general some that hear is customers, with address in that As left powerful I provides still incredibly specific earlier, and some back it, did matures some is to time, that in need we product so in still I stable, but mentioned and our

we’ve So innovation. before time got any significant need we some to introduce

Bill Dawkins

margin, lastly a what then on that? gross cap the And Pat, Great. would on be

Patrick McClain

that high XX% is to to still be the as goes level so think cost, customers. honest are our to that’s high and into about as primarily provide calculation, that we support into of probably our drive high go pretty want you. with What support organization, I that customer

Bill Dawkins

Got it, Great quite Good on and the job impressive. I too. really time. guys appreciate job call the

Todd Brooks

René. Bill. Thank you, I appreciate

Operator

conference question. you. I’ll appears Mr. turn [Operator Instructions] no there are further It to Brook’s the back

Todd Brooks

We and for FalconStor's folks Thanks summary. Great attending. important, and busy, is you’re but once we're important, this again about is future for know excited it.

the earlier, going that but the we’ve said to in I to exciting. that As result to we are are do really lot happy this three months, it we is we And, but long-term to we a excited by been work and think be do. first drive have really able of that

and to we you you return thanks So for joining, Thank will again your René. let day.

Operator

presentation. Thank you. This participation. today’s conclude you does your We for thank

FalconStor Software (FALC) 20 Nov 172017 Q3 Earnings call transcript