FALC - Earnings call transcript Q4 2021 | FalconStor Software, Inc.

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Clark Liddell

Thank you for joining us to discuss FalconStor Software's Q4 2021 and full year 2021 Earnings. Todd Brooks, FalconStor's Chief Executive Officer; and Vincent Sita, 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 then the company's press release issued today.

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

Robert Brooks

call your All each of thank right. like time participate I'd to to Well, thank that. you, today. in our for Clark. taking Appreciate you

work market to to by value of but serve So I we and pleased we've lot solutions our got the very do, the partners provider are enterprise am a deliver and service our that making that customers that main progress every in the we day.

innovator. protection We are trusted a data

X,XXX customers, across protecting and and providers archive backup of well enable priorities at operations rationalization of experience user hybrid are We management. our for shifts have data here and which an services world, cloud, our centers outsourced under to world's and most data managed We the the and on-premise modernize data and aligned. their and managed data over demanding public exabyte increased enterprises service top end data center to to are environments. enterprise are fundamental very leverage COOs, technology they macro cloud market well FalconStor for cloud the Migration

and quick data solutions recovery, over data long-term security for by including ransomware provide cost data while these accomplish our XX%. increased driving attacks. footprints from deliver And solutions down Our storage of recovery the

extensible seen these we strategic the our our quarters. attended decade. long-term X the against retention fiscal every initiatives. year if strategic quarterly and these recovery year calls growth creating X over we drive and line data industry-leading you've But quarter by and generating our next or new, the X first, and flexible we over before protection believe that growth implemented will reviewed data last each innovations initiatives our key For by XXXX, materials, executed product consistent expanding that you've last were, And

Second, business to replication then strategic on to are and largest cases our important are focus and R&D data-driven we ensure or focused most to that our sharpening customers. which products our commercial those on related use continuity

to beginning And profitability. delivering on generate growth Third, finally, on M&A. then via consistent

did how initiatives to X So going first XXXX? do we're through do, well, here our go is we results. against XXXX key those thing QX throughout Well,

year-over-year by for So first, we we had year-over-year increased entire XX%. by And revenue the GAAP our XX% QX. actually year, revenue subscription subscription-based our in increased

increases pleased revenue. So in these even But our certainly we're more think our growing revenue, solid we subscription-based can recurring subscription on GAAP to very that we and continue are we as focus about accelerate that.

can we then, And focus you X% but GAAP -- our it's revenue, quarterly inconsistent. revenue a consistency our top as Second QX, remains were increase areas. year-over-year delivered we of GAAP one total see, total in

So increase last we quarters down; we in were we year-over-year; if were QX, we QX, you but QX to down. look the down; were in QX, QX, delivered X prior in XXXX, XX% over

very driving on quarterly focused are consistent we that GAAP opportunity an remains total inconsistency So revenue.

our year-over-year. X% on were expenses we then, our -- operating tightly continue to we for operating managing focus XXXX, of down And Third QX expenses.

great. that's So

inconsistent. continue And is revenue net income to So that's GAAP remains on, our our this revenue then GAAP continue is total area inconsistent, focus in. I that say, growth, opportunity. the obviously, an we total because is largely to And fourthly, driven that we well GAAP last, consistency should do an

GAAP a about delivered Vince, year of about net well $XXX,XXX. loss go in income a we minute. through here the XXXX, income, of the But of we year quarter, these a net a for XXXX, of details for But $XXX,XXX. that delivered So for

income remains our net of area this top total priorities. total revenue one So in of consistency GAAP GAAP and

-- reinventing on a say FalconStor years. when now for So probably we about working few you guys been we've should know, I

it so at progressed. key to helps look And think time if how a that we I see few we period metrics of over

first, customer revenue retention. net our So

we a longer excludes that now we because a treat hardware hardware it treat pass-through. revenue, no So as

And revenue was XXXX XXXX, in in to That's XX%. so grown our XX%. customer net retention

margin was gross Our in to XX%. That XXXX. grown has in XXXX XX%

grown flow it's Our cash pleased adjusted while improved, in delivering that improved, to it's it's cash X% XXXX, was certainly and that every EBITDA Free year. flow, we're has not XX%. positive

from $X.X burn million $X.X burn it to XXXX in a million in improved we've a So XXXX.

make R consistent, one can score, so But of growth annual R we annual see positive know, focus and as our that simply Fifth, positive score, percent. year-out, free year-in, XXXX. You that cash items. probably we as cash you defined revenue our flow right, is need flow, remains EBITDA plus percent in delivered to then that

grown were to of when we score XXXX, an XXXX, R And at of So you XX. XX. look an metric at then in in that R had negative that score

has and from XX points quarter that each is of we've which XX%, just a we're Because that And that pleased sales. maintaining revenue total over of Back of those little shrunk increase XX% an markets XXXX, China. over noncore EBITDA. our or reviewing markets, been tracking in finally, our in to percent an our that's our as then from a So was sales of metric X%. period increasing XXXX, example, last both growing very it's In with. time, of sales reflection the about

to on and continue us those can believe we and that we we in for markets that As are efficient focus where win. differentiation to we have operate where

forward. markets those our a be X% less maybe move expect I in forward, to Going as bit from that range, we will continue sales

focused cloud I the the by Those growth a that mentioned are when I'm service, started we on. excited markets data as we and So services. protection IT being call, as managed hybrid

reflections are aligned. FalconStor those our are technology quickly, shifts is very of into macro industry, they growing in clear and All experience occurring that are of well which and

to hybrid predicted is X% is at market predicted billion to XXXX. in to the finally, XXXX. billion service XXXX. a as annually to protection data is $XXX in XX% grow market grow to the predicted $XXX grow XX% managed in cloud market $XXX The then services to fact, billion annually And annually In

exciting to hybrid that So partners service the over markets several ability market these on for our on years. for we providers to and generate us And be managed key believe growth focus will focus cloud to are in. FalconStor drivers next

with, that that like X have to XX XXXX. protected of manage we service XXXX today, in exabyte patents is review technology, So accomplish highlights important by pleased we're and and to able that technology that featured managed patent over I'd organizations using providers X,XXX in data and commercial FalconStor applications. over that some we're

for launched product, First service MSPs our we've a multitenant of we which improves retention data a call data of version optimize to long-term protection the or they all, the ability and significantly product for serve. enterprise that providers, managed recovery customers StorSafe,

cost MSP management, public IBM data reduce and or Wasabi. seamlessly Microsoft storage by improves tenant storage, solution storage cloud such as this data StorSafe Our leveraging Cloud, AWS, Azure

and more the QX. only Next, And able to aligns end we to per MSP this already we X is for pricing in a models. did model working. month toward several monthly per with we structured new we what tenant business disruptive were -- added introduced OpEx Not their MSPs new of secure be move which QX, but proven very we believe has our well partners,

pricing in or excited -- is about the that received market. the being how model that we're the and -- So reach

with offered launched our or into MSPs our able diverse a initiative customers the Third back MSPs operating key be servers this like to are to then, we either an including to Server platforms. that IBM for i. for And our leverage environments, and Power as environments is IBM service migration Intel flexibility service

Next, storage we rates that's protection in to Vantara data with with Hitachi snapshot-based flash expanded advanced then our disaster our Hitachi StorGuard fourth, recovery for replication, technology. partnership global cloud-enabled provide technology,

demonstrate fifth, government we pleased continue several launch enterprises, So deployments large solutions the data that. institutions across we of then protection with And data and able ability MSPs. to be our multiple scale to were finally, multi-petabyte centers, expansions of to to

in about to we're we were what able So excited accomplish XXXX.

I'm we're latching by we've progress into a XXXX. to As mentioned lot work of earlier, made. we the do, I have excited but that

So have quarter then against that for XXXX, here initiatives we progress will growth we our every have then, calls. set key X our as again, track

growth focused cloud-based market the and as moving as a migration and First, through services data by client-led on by targeting to protection, using forces service a service that are MSP. both generating we're as backup

So growing that the said macro focused to through in is another on way, MSPs protection moving important data cloud, industry. is our happening very that shift a

generating by storage Vantara. with mid-range on we've into through our We'll the growth expanding leaders we're technology then, with of the Hitachi reach initiative. done already FalconStor like focused bundling storage that market continue Second markets

cash free to as on become and mentioned consistent I flow increasing profitability then, got Third our much every we've quarterly more quarter. earlier,

generate last did we'll able to that. in on which via growth to not not XXXX. not we were M&A, on least, working So focus but -- accomplish then And we beginning

hope we begin to that in XXXX. So

in I this before wanted crisis to go through do, So just it I a XXXX. the But to over Vince Ukraine. ongoing minute, for I'm to turn detailed QX just both financials and to address going in

tragically our with to any and impacted. we'll thoughts valuable our been customers cause don't Russia. their impact closely in have across potential continue the all -- globe data. and most regardless, or negatively So the monitor And this protect incredibly contractors our customers for prayers, tragically business. are continue be continue our any to all or those potential has of crisis our disruption impacts any We help diligently to employees, to that any have employees, so either And the business. importantly, Ukraine situation to But FalconStor

the has we very -- day. a focus already be solid grow. operational and that Brad This Vince strategic mid-February. future Vince over was back Chief introduce he and FalconStor. FalconStor new Vince he our it's bringing it asset our to a before like is appreciate brought foundation over to Vince FalconStor replaces years. in FalconStor Vince. a I dedication that joined important strong our X and going team. We single very I'd is appreciate for -- from to planning which key that very who the company we talent can for Officer, Vince as he the wish inheriting So to every well his is to got in and He's build Sita and experience Brad a a And turning Financial the Wolfe, to asset

over overview financial with it Vince? finally let detailed turn year full So of that, to a and Vince our for QX me results. XXXX more

Vincent Sita

Todd. you, Thank

Okay.

a XXXX, our closed increase GAAP same previous of revenues, XX, in the ended million $X.X XXXX, of $X.X million, $X operating million total of for year, an to $X.X GAAP was X-month $X.X quarter the million X%. of fourth period increase total quarter profit the X%. to the million the QX of $X.X the for expenses an GAAP compared period to So compared we year, decrease for December for were previous million, X%. XXXX, with compared for

$XX,XXX And to a QX a of in compared result, operating operating QX XXXX. of generated we GAAP a GAAP loss so in as income $XXX,XXX XXXX,

However, despite as QX a of an XXXX in our was a we QX to deferred income we a with tax versus we deferred in net $XXX,XXX, asset. revaluation tax loss GAAP XXXX, in And ended an in from higher up loss of QX resulting QX XXXX. XXXX, a had a that -- $XXX,XXX, $XXX,XXX higher XXXX, did for expense compared operating of loss GAAP net of result, generating operating

was X%. to year, an year, XXXX full GAAP fiscal expenses million, GAAP year for previous $XX.X a million were XXXX, a for increase revenues total X%. of $XX.X compared fiscal to closed of million year, of So decrease year compared operating we the $XX.X $XX.X profit same period XX, X%. compared $XX.X to for total for prior million, of of decrease the million for $XX.X million, the total on Slide

a did operating only $XXX,XXX, GAAP would a As benefit a $X.X fiscal year XXXX for of year a year contractual for income have of for gain gain, dispute. for was $XXX,XXX settlement income operating that breakeven a XXXX. produced income result, legal we XXXX. include versus fiscal a million Moreover, XXXX related full of to GAAP Without operating

XXXX quarter at income $X.X million September million for December million year $X.X cash for a with net now XX, income the of a $XXX,XXX, September of XXXX. came GAAP sheet, at we XXXX So GAAP net balance compared to we in balance and $X.X finally, to we If $X.X for compared the in XXXX, XX, to ended million -- turn XXXX. fiscal

stock over $X.X second improvement reduction a the So from and XXXX and $X.X million. QX versus at proceeds quarter of X $XXX,XXX $X.XX. of an common XXXX of QX price million XXXX, offerings of our gross a third public we In of of raised

end Net but a value working contract at ended including the the from receivables, notes, deferred at decline paid, our of $X.X of QX, excluding payable balance. also $X.X $XXX,XXX We notes term redemption our QX million revenues, towards of capital, XXXX. million,

$X.X QX expenses with However, deferred That's $X.X of of million an receivable. and accrued We XXXX. any of for of gross payable in million million. Accounts improvement reserves. $X.X -- revenues quarter closed accounts and million the on $X.X account

of between So our of and to million. XX% produce we between to compares XX and our XX% range, R of providing XXXX in million. million the are of $X.X Rule and revenues This maintain net This XX% XX% to million versus $X.X net or million. an to income million, for guidance: XX. EBITDA of $XX.X percent $XX.X income $X.X XX XXXX XXXX, in following million. EBITDA an income a revenues Adjusted a million score will percentage $X.X $XX.X range And the at the to of net $X.X

we for back So comments. profitable plan, you from allow I'll a Todd, accelerated final to operating for are with to to turn growth. committed base this it

Robert Brooks

All right. Well, thank you, Vince.

quick with made of to a cloud a and Hitachi with MSPs, cases partnership we lot with our it our We results. commercially, as Vantara. hybrid are progress especially relates So XXXX summary, use pleased

that we'll looking and where we and we've about going that to continue are forward are build And XXXX. where excited foundation we're in So XXXX that upon in here we built.

may over turn the that, will me that with So he I'm let Clark have. it up Clark? for going and any -- questions to back anyone floor open to

Clark Liddell

[Operator Instructions].

flat says question From here, guidance the with Chad, XXXX? is up and market, Okay. big a opportunity market it Todd. XXXX in X X% traction to got versus for I've

Robert Brooks

Yes.

correct. is that So

So perpetual model. the shift -- license if from license our you remember, we're subscription continuing a to model a

in impacts way that to grow any our continue shift. ability So as work that to short-term we through

rates, base combination, can, a top expansions revenue legacy growth, a of of for much it's subscription as through Chad, some right, our in as we on through customers markets. maintaining and of new possibly through but legacy that so renewal And layering these our of higher great then

targeting diminished for percentage net you we total subscription-based, we are when revenue the little total little So revenue great question. into rate the But that it a is deeper get higher until of growth being out, going be all a year. our But growth bit. to

Clark Liddell

time. Are All at I'm right. other Todd, Okay. there any seeing not questions questions? any other this

Robert Brooks

looking really and time a thank your All in time. you again you. months. Well, forward with once right. speaking folks, to Great. couple again, of you for We Thank your appreciate attention and

Clark Liddell

Todd, you here, we just got a question if want to tackle it.

Robert Brooks

ahead. Go Absolutely.

Clark Liddell

It what in Wallace. is from says, so growth XXXX? It's subscription

Robert Brooks

XXXX. in Subscription growth question. Great

ready. increase about I think we're the of it's I slides I being mark. being year, -- have have don't around right apologize. that I number between I -- the the as I in we one back and XX -- then year-over-year. mentioned a a the XX% Wallace exact But in the think should QX XX% and XX% that XX% year-over-year

depending on priorities, one or ability opportunity some go-to-market these think our our some, as subscription, remains even that initiatives. bit. increase of to little making we But how we're shift of to that do on does grow a to to we're big it hurt total that an maintain revenue have though I able

Clark Liddell

Okay. No I see that Todd. questions more

Robert Brooks

right. good. chat months. Very in and we you. once All thanks, Well, again, of you a folks, couple Thank will

Vincent Sita

you. Thank

Clark Liddell

Thanks.

Clark Liddell	VP, Strategic Operations
Robert Brooks	CEO, President & Director
Vincent Sita	CFO, Treasurer & Principal Accounting Officer

FalconStor Software (FALC) 10 Mar 222021 Q4 Earnings call transcript