FALC - Earnings call transcript Q4 2017 | FalconStor Software, Inc.

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Operator

Good afternoon and thank you for joining us to discuss FalconStor Software Fourth Quarter 2017 Earnings Call. Today’s call is being recorded. 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. company's are other FalconStor's Securities reports Commission in uncertainties XX-K, on and and today. and and issued XX-Q, filed the risks discussed reports in Forms Exchange These release press with the

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

Todd Brooks

for to time thanks took you, call. earnings Christie, join QX everyone today and your that our Thank

known our known discussed XXXX. in what has its we time As - storage last as earnings or the has call, since leader launch QX become industry. been as within been software a defined FalconStor during what’s

Our be billion sized by grow of at IDC growth over XXXX. market to XX% at rate $X predicted to through and XXXX approximately reported was compounded a annual in

organizations solutions data role protecting valuable play within and world. the in and large managing products Our a enterprise around critical

value about in FalconStor our shareholder on Our to our unexpected their critical excel ensure has it to we've to performance disasters, efficiently the critical customers made data depend solutions And FalconStor term provides half base. rely and deliver mission progress the that XXXX. on long continuity. its and the support from that outages. unplanned malicious operating during second effectively, clear of to opportunity securely excited We're They protect cyberattacks business and

operating to initiatives. on a through QX, on ensure adjust are healthy quarter, we on continuing the focused three profitable and expense base to foundation. our During key we One,

going the long funding and base enable today's to the term end up initiatives, on that to of call, for and for Second, global of the each we'll we’re company. And securing these the at we're more - have. in line the our phone reenergize on may little a of questions thirdly, needed to - And relationships any the sales. user elaborate going deepening you to balance end to partner key finally, open success dive then

focus on first launched that of to So generate QX last net profit first $XXX,XXX million strategic XXXX is in company allowed actually QX applied additional annual first continues and This operating million company or operating during $X.X The XXXX. and quarter. generated net to a non-GAAP QX, is the in the earlier during powered the net profitability. QX the profit in the annual loss to profitability return since quarter improvements an from income $X.X XXXX, we excess XXXX. we XXXX a in non-GAAP of that we which the restructuring for the delivered

operating loss performance That’s during also QX $X.X over the million non-GAAP last in XXXX. of a of Our non-GAAP in deliver nearly operating $X improvement to net million $X.X income us annual of an year, allowed QX XXXX. net from then million and

to growth. when base they uncover value In value create companies focusing and my business mature experience, and growth. stable It’s during not growth. and foundation year resultant This the on install will But financial stability significant the utilize critical only enterprise commercial existing ultimately time with and and a bookings and base. creating revenue term stable partners last work our spending year makers receive a performance requires quarters, support by also profitable - driven result for decision Our they first retention, over software serve resulting is from long performance top certainly expense profitable can by a as customers two simply products. of

during discussed yield continue - base. positive in QX have in results And continue QX. efforts the XXXX we to or extensive to our an call, reengagement installed As

let statement, steps by second compared quarter. XXXX. increased the this three with half XX% of support the in over to half partner XXXX, me FalconStor from our highlight So of their the billings largest To global as begin, first

Secondly, same year. as billings our delivered three for to FreeStor, new QX our product, as during by XXXX. to QX which point increased QX for by XX% in And increased customer XXX% is our products, quarter billings of finally, last flagship compared solution XXXX, the from compared then partners

encouraged progress So that we very in by the QX. delivered we're

$X Hale QX step Next, during financing the final a from closed commitment of the million secured company, the we Capital. as to ensure viability long term

to and now turn and additional me on Pat? financing, results. some then provide financial on QX details CFO over Let also it to Pat detail the McClain, that our

Patrick McClain

Thank you, Todd.

As on their XX, into announced, secured with term $XXX,XXX announced commitment November the company. short a we Hale to and loan previously entered financing Capital

this the report of $X of closing financing, additional of - Hale the preferred we future. maturity stock, stock. The from of XXXX. to with waive the has a support agreed series Hale rolled company $X specifically the million XX, February mandatory the A August and that financial term provides a XXXX pleased note the series also million, and $X.X X, with maturity prior this the of all of July breaches a postpone loan foundation With to of XX, the continued million that solid A on closing June date the XXXX XX, redemption to an Capital received Capital longer terms We're financing preferred matures into commitment for XXXX, the

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

XX% due in of exceeded comparison decline - quarter QX, decline renewal a - although a third quarter to large in show delivered the XQ a XQ XXXX, we quarter, Bookings as representing of this increase quarterly closed our QX over although XX%, our to third versus revenues $X.X X% XX%. in primarily versus revenues at million, XXXX. by approximately we year did days maintenance but to significant continue decline Although year did we

that implement strategy. our QX to attributable and to and our expectation few over continue to revenues margin increasing in bookings commercial continues resulting is QX Our is will base we XX% for from for to next This product increase trend XX% reductions cost XXXX. XX% customer reforecast as the and stabilize quarters higher, reengage Gross mix.

XXXX. As QX of at over operating realignment a a result our XX% decline trend and million, to of over control initiatives, non-GAAP lower our representing our cost continue X% expenses QX and $X.X

second million, Moving XX% net and XXXX. the To to full re-emphasize year Gross since margin reductions our a million Todd’s $XX.X of year the over at decline XX% experienced income with on year We coming in cost revenue results. $X.X annual versus in half $XX.X million. pleased of from to full with increased during non-GAAP report are XX%, profitable XXXX. statement, earlier XXXX, of operating results mix first year we product to revenue

to cash ended with QX. million, a quarter We $X.X the of from end down now balance sheet. over of the just Turning balance $X the million at

due at comments. ended million your end I’ll from it Todd, million excluding ended to Accounts year $X.X strength However, was coming in back primarily net previous turn accrued from up million, QX which payable of the the the $XXX,XXX $X.X final at by billings We accounts working $XXX,XXX, QX. over capital, $X.X up closed with at revenue, million. XXXX. of with expenses you at the and of $X.X receivable deferred quarter, $X.X million, for December on

Todd Brooks

Appreciate Pat. you, Thank that.

are the with made we at summary, has in team in the So pleased FalconStor. very progress QX that

for pivot ahead still QX, point we of do mark Now, we significant important and work in QX the an but believe FalconStor. have us, company’s performance

So or days to our shareholders the who and customers call we may recording might today that listen to exciting value all and who FalconStor. are later, to - we be at to this forward our committed joined look have delivering

Christie time, ask I’ll question-and-answer to So the Christie? at begin this session.

Operator

take one from our from Allen We’ll instructions]. First Zwickler [Operator first Manhattan.

open. is line Your

Allen Zwickler

Good afternoon.

term, Just shares just two and - one many have how this dilute as share are an If couldn't you at you questions. outstanding count this point, - to estimate could fully the I currently? do to guys were numerical use

Patrick McClain

Yes. the is million with just potential $X about yes, Pat pool, that would far, absolutely. the is pool. with $X is on so of which the the offering, option based on million, - $XXX roughly the Well, $XXX commitment funded This management have McClain. we Based million million

Allen Zwickler

before, $XX roughly? right, had million you So

Patrick McClain

$XXX diluted, Yes. roughly. $XX have authorized. had million we We million Fully

Allen Zwickler

Okay.

- sorry. I'm So

million Did I So million? fully to all if hear $XX diluted and Hale’s you had to that $XXX go of right? shares, going you’re

Patrick McClain

right. that participate There’ll units. an can will current That's offering be come where shareholders purchase out alongside in our Hale

been I X-K filings. think that in that's disclosed our

get as million funded. XXX So could we if when - if shares is be fully the that we - offering get as - much it

Allen Zwickler

own the And percentage Hale were those that would shares if of case? what

Patrick McClain

… on depends It

Allen Zwickler

as nobody assuming we sit Well, today.

Patrick McClain

one we participates, As today, Hale XX%. sit no own if would

Allen Zwickler

XX%.

they're If your customers not XX%, that. could to secondly, And one it. two got you who wouldn't we know are? or largest disclose over Okay, get

let you So could us know?

Todd Brooks

not right to probably In now. will future, that, begin Yes. the to but we today. not Prefer discuss

Allen Zwickler

these because are companies recognizable But - their…? about them Okay. increasing you that talked

Todd Brooks

Yes.

Allen Zwickler

That’s great. have. Thank you I Okay, much. very all

Todd Brooks

several large have really a little number few global just of quite it. a - can We of color a - bit give I We’ve got large on partners.

Allen Zwickler

much. very you Thank great. Okay,

Operator

go Dawkins Incorporated. Dawkins [Operator Bill instructions]. next We’ll Burleson from

is open. Your line

Bill Dawkins

estimate of the Could Hey you me couple the guys. is? next give you really bottom an to I know you revenue these of of quarters, things talked about where stabilizing. think line

Todd Brooks

perfectly kind to accounting number, know quantifiable not in don't be now XXX changes. But think I I question. exact from going large But the if peg an we're there's believe you we business maybe a Bill. to want with think we the with Good even at and effect from that right - feel base, we’ve arrested the some, I perspective, reengagement decline. look had like customer beginning general, we - by we in of that that it generic the

surprised again, ship feeling be now to pointed our efforts the focus we're where we're the going good pretty in got for right can growth. we on that will guys direction Now, but put to we've and begin obviously,

Bill Dawkins

how thing get these growth, once this those ramp get company all of trying - stabilized rapidly ramp how stabilized you grow And to again, and going this think, out? all customers can this company along hopefully lines once to begin this and you can thing

Todd Brooks

There’s organic of as It and inorganic. will forward, a strategy - likely lot, go kind dual we Bill. of a employ, depends upon we

organic growth our growth the back on So then acquisitions. set through and product strategic existing of

And on companies we might that so of the largely the on a and - go it types lot of depends acquire. just

think M&A. of product on think that be that we also again. growth while the modest would to would amount like then you But deliver into turn set think organic high growing we that base via product some I it companies a growth adding I set naive the can super organic software mature FalconStor, do side, are

Bill Dawkins

my press your It’s as company why really never just in state, showed you’ve about haven't that's mean damn the market. damn releases We’ve FalconStor and ask reason - I is, is, topline ever little this good for this on this product pretty just I’m… but this product. That’s up a question got we I with it of market, product I size The mean ramp. bitty talk big I the mean I got what the seen

Todd Brooks

covered you is fantastic. call. product I Yes. three keeping naïve agree lot But because right? don't from products. And customers. So But from of a it's in high here about surprised look knows? might was Bill but reengaged - all Well, proper historically The heard down. we’ve company A fell account - we want in super to can't FalconStor think where a the or we we organically, the hearing right? be is sudden, like M&A. two little products core all just relationships, uncommon, with bit, rebuilding with And the fantastic a in they speak with commercial that to struggled and as oh, with, management, they in going customers discipline, that drive can so who are grow become I can at guys weren’t obviously haven’t the via years as we where serve We what think comments touch just growth The to exactly not execution, I QX of you. just be foundation I we

Bill Dawkins

you. Got

concerned? is So the as we package as bigger be of something far can core the

Todd Brooks

Absolutely.

Bill Dawkins

Okay. Thanks.

Todd Brooks

centric And are think that our opportunities is think centric. we I a lot areas begin And to enterprise right? to which there strategic you know, well so storage interesting software of applications, we as lot storage, go is to software in lay into, roadmap of begin and a other for enterprise about forward going might as out we

Bill Dawkins

Thank you. Got you.

Operator

instructions]. [Operator

back it We any in I’d queue. have to turn questions no more to the closing for you like remarks.

Todd Brooks

quarter. look you Christie. Thank call taking you. very No, forward I'm attend again, out good, much. your our next to thanks attending call. busy And We everyone your once Thank our today, schedule time to of for

Operator

And participation. Thank that you concludes our call for for today. your

disconnect. now may You

FalconStor Software (FALC) 22 Mar 182017 Q4 Earnings call transcript