FALC - Earnings call transcript Q2 2020 | FalconStor Software, Inc.

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Operator

Good afternoon and thank you for joining us to discuss FalconStor Software's Q2 2020 Earnings. Todd Brooks, FalconStor's Chief Executive Officer; and Brad Wolfe, Chief Financial Officer; will discuss the company's results and activities and we will 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 www.falconstor.com. information are website earnings the release supplemental Brooks. I'm to Todd call over the pleased now to turn

Todd Brooks

All right. thank appreciate our for your taking I today. everyone participate call I'd in and Thank that you, time Clark. to also to like

four two As initiatives key we've implemented our calls, strategic last XXXX. earnings reviewed for we during

First, we retention we commercial grow Then on our products to consistent the business third, data over will delivering most continuity to driven growth, focus and investment demonstrated flexible customers. our strategic and use largest long-term important sharpening consistent on believe and to on by generating regions growth our ability our ensure focused our to extensible Then expanding replication related and ability creating next focus and R&D cases which to industry-leading decade. our storage profitability. our and have are line we enterprise and our archive data innovations Then operating are finally, that reinstatement on where second, product those win. drive commercial increasing new, on to

three as through approximately by being at grow rate of has reported sized growth by been and growth then Our XXXX. factors. our research pointed which market, be a This is resulting billion a currently at obviously focus result and annual predicted are verified strategic a set XX.X% of driven compounded at products $XX.X to to market

a need data data and legal then they've and growth storage manage Then the by to time dramatic of contemplate on cost-effectively, in had cloud. retain cloud second, being data to this in they generated of to and the traditional and for data capacity captured digital on First, various data periods past. center, explosion regulatory ever-expanding enterprises that private an raw, ensure need data public or whether located a on this on innovative raw a in the dramatic increase finally, be on the the securely technologies options amount of compliance. lengthy in type ways never of for driving to This perhaps is data managing intelligently stored of

fact, according enterprise by data is of data up related routine IDC XX% to to an In to directly archive. managed

at Our to is archive alternatives are stringent technology the allows Hitachi XX% procedures, up most Wasabi, COS our policies windows an Content we Azure, while AWS, Google Cloud available reduced deliver HCP, that IBM and and existing I archive data by Object Microsoft and capacity be the the leverage to storage data market enterprise ensuring complex business as Storage to Platform storage are value very enterprise customers. excited improved and Cloud met, efficiency. such this about or for to continue FalconStor

each a For balance strategic QX of elaborate will provide key we of initiatives and financial today's results. our of on detailed the these review call,

may have. you will phone questions line for we the Finally, any open

to area we'll into result lines, webinar like dive question be let's a the With enter open you some question once that upon panel would ask QX you If use the happy to of and the question call ask to please phone your live. highlights. to your we then question within the

of The our operating very to been performance been mind, -- thoughts value top by has know, and that our at as the our be and has at the caused are pandemic COVID-XX, we customer the we are our everyone that of outstanding of in out by spread. minds, to ensuring is go by uncertainty safety that disruptions the the been partners. had, we its as priorities, top QX. continues top has customers our strong global of employees COVID delivering You our global Despite encouraged the impacted our one to

driven the new bookings. Americas, bookings, markets First XXX%, we was sales during Southeast increase a in Japan. EMEA, an quarter core by customer Korea generated our within XX% our year-over-year in of and increase This increase, the Asia, global

New and in and were the care, Americas our the the health majority in services global strong especially EMEA customer industries. of wins were technology and wins financial

primarily GAAP strong our in maintenance a decline total despite actually results XX.X%. our recognized then, That Second include bookings year-over-year markets, non-core revenue in growth, recurring and revenue, was and driven by declined which China. sales by

market as expect, our revenue replaced. core results the -- revenue core non-core I our do to market several Over producing say is market quarters should our begin global next we increases, year-over-year strategically

at spectrum validation, simplicity container leverages to multi-cloud to data leverage. archive Third us especially storage as decisions our proactive back to We any that will essentially in potential implement made net create GAAP technology, and the of improves allowed enable dramatically ensuring this that a in a and archived persistent, data the business, against portability, of capability income, generate in to quarter, combined security the to game-changing to we environment, storage expense challenges hedge with customers beginning StorSafe strong bookings accessibility, reduction access. the COVID-XX increase. storage. plan, first, sales patent-pending $XXX,XXX of efficient efficiently archive we usability options enterprise in then, and and our the Fourthly data our secured it newest of during back age-old quarter customer. long-term was launched a year-over-year full we utilize, the which industry-standard security StorSafe, StorSafe data and portability, XXX.X% which reinstatement long-term quarter, product, while at storage during power also the our is resulting quarter which retention archive data beginning a to the then, archive believe integrity solves relates available that

a QX, to then, compared of in increase, end $XXX,XXX Finally ended with cash our we quarter the the XXXX. position,

products. seeing the the partner global -- also the to network. in am results are should for our our Industry pleased their a for encouragement and with Customer and could in we've are engagement, I and close disruptions and driving excited FalconStor be in our potentially any team innovative that that we support and new caused our by all, I'm all response being analysts' StorSafe QX very keep I performance solution, for our So that Despite which to or caused very eye the by realize with got say we us out COVID-XX. produced is demand with strong strong customers QX,

Just relates a points COVID-XX on impacts. we're it seeing few as to what

to the foreseeable future. First, continue we'll from and for of their employees to of home to do that we the them and continue our work protect families, majority ask the health help to

industries solutions. despite many customer and services, which Second, partner financial area within disruption such are as in experiencing, and data target that our business-critical invest enterprise our continue health based care we verticals Especially in the of protection to unfortunately the technology.

the then, Third disruptions. despite pipeline fortunately, strong our be COVID continues to QX

we our that commercial so, a results we'll very strong and and had and strong the one we we'll data delays encouraged that we around of can within to segments they in continuing that keep to necessary continue possible in the is, we've are continuing we'll what mentioned the as that are prolonged with July open products our impacts from certainly Nonetheless, deal fact, area be in partners In data result to adjust of continue the were reasons of results. and by sure COVID our protection eyes protection and as our so seeing. make companies results plans that invest the customers deliver the are because we're I realize to that positive operating future of we that have world play.

are products service utilized enterprise managed might providers and So, two they by protection. our areas as of address enterprises the you globe across remember, in key data

statements driven data and business replication. archive long-term secondly, First, retention continuity then

and means of to defined, software be which software allows cloud that are maximum hardware, technology source existing solutions customers data-agnostic investments. products the leverage giving our Our and our our hardware

to design cloud-based technologies modern to product only Our drive innovative in improve where learning facilitate security improve portability to is data. world, intelligently data dramatically leveraged also enterprise our the in This of key is the integration advantage. to our and protected, and customers, accessibility accessibility their not enables competitive but modern

the dramatically actively these and VPL library our enable they storage called and earlier. patents then our long-term our customers product their mentioned archive operation archive management. retention sold archive and we've storage to tape data and FalconStor traditionally that historic data in With innovations now next-generation reduce virtual products I believe solution, segment, deliver Both archive security, costs, of challenges modernize archive our improving while Within which infrastructure, reinstated long-term then and marketing their we StorSafe, can are transform statement accessibility. archive and or on affordability, innovation,

protection together to data network licensed have as standalone within business our continuity or products or products these investments objectives, thing data Traditionally, be solution NSS core These customers products solution. our our recovery while our virtualization. and our recovery second achieve been via superior time storage replication platform. through point broader and enable hardware, continuous The optimizing segment, or storage storage advanced software our server CDP available solutions are could enterprise driven

these placing for segments future. product we'll continue So, within our two foreseeable focus the

product long-term earlier, As the retention our reinstatement has to decade. our storage data line initiative over and next been by flexible to I our industry expand innovations creating mentioned sensible key and drive archive, leading first XXXX growth, strategic

and large diverse pass, these this including technology our with to have and we market Windows As platforms, part and Linux others. expanded of IBMi initiative, go include targeted now enterprises

then ProtecTIER Second on -- ProtecTIER Replacement; has been IBM IBM invoiced.

on data finally, improve also Third Dell or tape storage our excited which or -- cloud I'm leverage has on or data say. I the storage helping Fifth, management legacy in EMC Sepaton their been Sixth one MSP stores modernization. then then our dramatically should very Content partners and replacement upgrades. the Hitachi about invoiced. HPP that domain capabilities. helping on And then, HCP Platform and replacement, Fourth

and goes So area. paths this focus to actually continue we this in market to proven will effective, -- to have strategically go

this, nearly again call, I good. Finally, earnings summary, every but to and reiterate like I FalconStor think in that very is I'd mentioned

entrants advantage. space, data and is to two unmatched decades of protection this technology build Our we'll continue now in the by newer innovation upon

one our of that set provide well we solutions most solutions are storage that of customers archive Our innovating know actively deliver we into management this that future. the that industry's in powerful, comprehensive change and the the dynamics capabilities of space to are

QX point, financial detail So, Brad? our additional Brad at results. to I'm provide turn to about this over it to going

Brad Wolfe

you, Thank Todd.

delivered closed June As $X.X with during the turmoil caused ended XX.X% the the global revenue XX previous of by GAAP for total COVID-XX pandemic. compared economic $X same three growth, billing million the year-over-year million period we mentioned, the QX, year. despite Todd months XXXX We to

sales recent around the as recap global play that in Our efficiently economy strategic for key as software momentum Americas. protecting businesses our achieved with managing the the are our momentum the data world a critical confident recovers we successes will in role and solutions sales key such markets and

operating our As and $X.X $X.X preservation, million of of year, Xth This months XX% with million period. of business the primarily with XX% ramps in we for we product and were XXth gross on XXXX decision compared generating for compared we gross forward expense for annual and expenses up profit absolute flow, furloughed control three August implemented conservative the a the period. months and total positive our to commercial efforts year uncertainty a through for to the prior million returning XXXX. stop million income. to to normal margin expense XX expenses cost an be strategic employees to for three concentrated increase XX% Total the ended XXXX net cash million million gross significant the was to QX XXth to compared The year rate QX, QX $X.X $X.X said in the XX% total profit revenue dollars total or and balance June business will for continued increased back brought late prior trajectory of Due we innovation. three the GAAP last due $X.X with aggressive as $X.X months ended growth of QX, FalconStor to of due our of plan the reduction in GAAP move $X in Again, terms back in six in XXth XXXX prior the work as to approach the margin have in furlough run our Total plan. quarter operating increased This has margin gross compared improvement total the selling to to by or June our in cost June period. more enabled XXXX ended million XXXX. resulted million reduced the developed capital decreased and hardware. energy employees. year $X.X cash XX% as approximately

the $X.X GAAP XXth net million million net we prior current GAAP income for million reported of We the GAAP period. a compared prior XXXX, operating for three the months a $X to GAAP loss June $XXX,XXX a period. loss During for recorded ended to $X.X quarter of year of income the operating of compared year

Turning with notes Net cash to sheet. ended a million now of balance $X.X deficit. value ended XX working the to at but balance dollar million compared the $X.X million capital contracts receivable revenue at including term our XXXX. deferred $X.X the excluding quarter We December of redemption

receivable million accounts from Accounts cash $X Protection of reserve in mentioned million, the received million May deferred $X.X and for we last growth expenses the the XXXX. with of Business close $X.X As and $XXX,XXX accrued Plan of payable million. Payroll cash We $X.X loan and Small and quarter, revenue equivalents. Administration we of applied quarter of

note $X extend the and to and loan. strong and pay receivable our billing payable comes growth plan due not September million to ESW Our this off Capital momentum accounts full Hale in XXXX given we current in and

apply to for Administration Business Payroll Small the loans Protection Plan plan also quarter. this for the from We forgiveness

Finally, place COVID-XX. expense to turn back sufficient financing over described has we for for the surrounding commitments now final it Todd back will initiatives comments. in believe uncertainty I the our are the company you above and -- managing control over aggressive

Todd Brooks

caused summary We'll employees session. COVID-XX. through with begin as right. Brad. impacts continue All Clark, strategic what initiatives this unprecedented our the to our at our thank remain ahead. successfully part necessary XXXX. Well, throughout And to I'm the going manage go our by you, they protect operate to is and do ask against thoughts key Then time, Clark question-and-answer in in everybody to

Operator

dashboard. answered you questions but question in Todd. seconds. Thanks, that presentation pane if the any few type questions following any here noticed I yes; minutes just your has haven't little a monitor anybody for few a the would if in We'll

Todd Brooks

question here if seconds, XX shy one. case any Yes, real comes free Great. to submit a so Feel to everyone. question be you in just quick. have Don't mind

Operator

Still questions, no Todd. Okay.

Todd Brooks

folks time. it Well, right. your again very call Once thank All we'll then. you much for

forward in We performance so. QX we reporting are thus the days in again to or by far and in we our by obviously excited here performance that had And XX look QX.

you. thanks a everyone again So our call has with that we hope great for attending week. Thank today. And

Operator

Thank you.

FalconStor Software (FALC) 7 Aug 202020 Q2 Earnings call transcript