Earnings call transcript Q4 2022

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Clark Liddell

Good afternoon, and thank you for joining us to discuss FalconStor Software's Q4 2022 and Full Year 2022 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 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

Todd now I'm to to the turn pleased over call Brooks.

Todd Brooks

obviously for Alright, like we revenue, time of was our through each taking cloud, your important to to today. you in delivered expanded an improved you hybrid positive with customers and our partnership FalconStor and call new legacy increased appreciate as I annual customer MSP business Clark, thank net recurring thank well that income, I'd our our participate and retention. IBM, quarter for QX added

innovator, the a recovery, we protecting cloud demanding to trusted world's most and protection environments. for service disaster data modernize and on-premise their centers, is operations the hybrid data managed backup private enable providers cloud enterprises data public world, cloud across data and and FalconStor

and years data the are to priorities top years, aligned. of leverage managed outsourced and to and and increased plus experience center are Migration enterprise Software Technology FalconStor fundamental XX macro services CIOs which of are shifts market for rationalization XX well cloud,

while solutions Our driving XX%. these recovery, and down deliver footprint including data up quick solutions provide to for our long-term security and recoveries accomplish increased data data attacks, from ransomware by storage

solutions exceled protection four data cloud hybrid areas. Our in key

First, in their to protect mission critical scalability our enterprise workloads. customers as solutions enable

cloud. or to modern storage whether in customers flexibility leverage tape storage as exists in data medium that our protection from storage, offsite the have in on premises Second, object to

to empowers data, fourth, in leading as technology duplication decrease data up back hardware to in industry up then our our savings patented flexibility. vendor And by storage Third, their XX%. data their cost customers

hardware. Intel As power hardware integrate based our with IBMs and system solutions

centric IT packaged give especially environments. within together, IBM differentiation, our advantages competitive the enterprise So these solutions

as serve we reflections managed drive services well shifts growth growth in cloud macro FalconStor We're industry which in recurring markets revenue FalconStor excited experience and service, clear that for are and significant protection are to and and their by technology aligned. to are of the a Data hybrid ability quickly future. growing our IT the

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

managed meaningful partners focuses go-to-market on revenue Express service hybrid Our next the drivers IBM like several Service years. will over recurring consistent FalconStor for generate and cloud and key growth providers be like

have we And key initiated or strategic four second XXXX, to initiatives. - Now here. one three

that. about Sorry

limiting tens data cloud thousands and cloud then rate profitability on that differentiated expanding IBM on data hybrid of Microsoft for environments. position continuing on Cloud ARR AWS run extending our environment. position the third, cloud and then And And while IBM operate companies First, centric of deliver risk. secondly, to protection leadership protection hybrid Google Power our accelerating growth Azure, public into our consistent Systems

IBM we FalconStor, in Hardware VTL increase IBM QX. with StorSafe more and began hybrid Cloud. software joint Virtual even the our sales we Object QX pleased to with agreement we with Cloud Power launched IBM So strategic with are report And new Power IBM reseller XXXX of which combine in Server to are in these solutions, line cloud initiatives, with late provide pleased to that Storage, several IBM

now include Power and IBM IBM and first, running where utilize to migrate securely premises IBM applications Cloud and object Cloud in storage. solution up these an optimized our joint joint back data backup and joint their or for on can enterprise protection efficiently the customers, Our optimized solution solutions restore to solutions IBM Virtual is Server

where migrate migration snapshot solutions to Second, Power cloud needing now to enterprises joint and a joint availability IBM in to and a cloud, Server solution their take utilize existing applications include security. our restore Virtual secure our the maximizing Cloud solution, it to on-premises the application power

finally, instance cloud secure advanced premises, offsite now backup. then for the And for to solution secure MSPs instances on our a and location include cloud cloud joint backup to and where that the solutions with solution, utilize or hybrid offsite going multiple joint use cloud a encrypted were pair air-gapped

It partner cloud to increase with recurring this a strategic contributor should term clearly goal long So is significant IMB to step revenue. us. our be for significantly hybrid forward material a our

let's to we've the with seen on launching material IMB with actually, our second results. of partners, move in so in IMB since growth line and – our XXXX. especially revenue with Now, sales And half

compare first the started the XXXX So IBM of it's second with half half, to of growth, illustrate second with this in half. our right we believe relationship that's the to the helpful beginning

So this business XX% full XX% MSP, revenue year. while within total afternoon the by the the revenue compared XXXX, half year rate to the compared revenue compared Within as cloud second ARR hybrid to total our the the that the of half. declined run in earnings our our rate run for as release, increased increased piece, the of for by GAAP total XX%. GAAP reported in to our GAAP second ARR the first increased revenue cloud, cloud first then, hybrid Then XXXX of we half year half,

further. of to early are increase MSP rates install second we hybrid and our X.X% in we points of a of half. other used month. cloud aid growth. ARR but that average relationship with even rate we by So growth couple can pleased retained XXX% hybrid as cloud validation customers run on with that are IBM, an capacity our this the There based cloud hybrid by these We increased our storage And customers each believe our

installed Americas, Pacific global EMEA. and capacity the and customer addition, growth, to we all major across attention wins base In Asia through regions; saw strong three the

also key we’ll which won by Microsoft our we review customer minute. with first in and the a Power references, Skytap secured finally Virtual customer Azure, then Environment IBM We offered several

we It's also and second second year. expenses though to half the positive in operating generated in important half while this the of net revenue the note controlling delivering income growth our that

we've So customer several secured from these Express. as references and Furniture mentioned Service key City and include [inaudible], testimonials Tupperware,

I'm take available and within leverage Now to time each obviously FalconStor these read are but IBM not marketing we they during material. the going these falconstor.com to call, and the references on of

it overview year Vincent. full So at turn detailed over this to our point of QX to of and financial a results. more I'll provide Vincent XXXX

Vincent Sita

Thanks Todd.

income at look at we QX. with the statement So looking start – we if

just the could we if next So flip to slide.

at revenues, looking QX with QX gross $X.X in So million results, in million profit. so closed we $X.X

$X.X therefore our essentially or million, income a also operating Our income breakeven expenses was net operating loss net positive net was our so operating and $XX,XXX. of were $XX,XXX

as decline year-over-year So revenues declined of year-over-year mentioned XX% million, $X.X as to million. million compares a this follows: basis So $X.X Todd from $X.X on a to

revenue savings. expenses $XXX,XXX million so decline the the lower year. operating XX% by versus revenue partly XXXX, of $X than or $X.X QX was Our by offset were prior expense Therefore, – million the

line versus XXXX net negative so $X.X So XXX top million. revenue in was XXXX, despite decrease income lower the versus was [ph] of $XX,XXX operating previous year, $XXX,XXX it

was income last than QX year. QX After net tax higher this in our of QX higher income accounting for – provisions, year slightly in was

So it positive $XXX,XXX negative. versus was $XX,XXX

second XXXX, at XXXX as marked top the look we Todd’s with half a of we clearly comments. the on see first If improvement versus half outlined of –

generated in we second following. the So having IBM half of and XXXX, Partners launched the the IBM sales with

the So we million closed were with versus $X.X the was revenues second an decrease half Gross $X.X million XXXX, of XX%. half $X.X half, in XXXX million in a in first increase of $X.X first million versus $X.X $X.X of to XX%. of Operating expenses million compared million. profit

first of of XXXX. Operating income to $X.X in million loss second net income $X.X from to half. $X the half an in million net of generated loss a million operating half in perspective, first second And compared we in finally, half compared million the a $X.X was the the

sheet, Therefore, million last from If with of but ended XX, slide million on compared and to year million the we a to to next $X balance quarter the cash balance we September $X.X compared XXXX. on million $X.X of look and increase XXXX of of we decrease the a over year, million. move XX, of $X.X this $X.X an QX at at December

XXXX, networking so capital, our and term XXXX. $X.X from networking assets of and decline from $X.X but a includes $X.X cash million million at excludes increase revenues, deferred of QX, value redemption capital at million, an Looking QX, contract notes of the ended

million deferred So accrued revenues accounts million $X.X closed accounts of $X million. of the in with payable and $X.X and we expenses receivable, quarter

final comments. it turn I'll to back Todd, for some you

Todd Brooks

appreciate All that. right, I and thanks Vince,

our we've in delivered we've the So of increase our absolutely of IBM into of we work front in But growth to and us even remain rates that some we expand obviously areas. in a half that have other areas. to encouraged and those other with XXXX relationship progress by and the growth by more profitable and second are the to growth made lot

enterprise the and our provider partners the to partners our single customers service excited are But differentiation and main we and competitive markets we by are enterprise that deliver serving we every day.

Clark open that, can you to the questions. ask with – line see let we for So me up if

Clark Liddell

like if up there's me just ask. this for know a little and open we’ll while And just you'd let anything to

no yet Todd, anything seeing hands not I'm and raised.

attending. everybody all I So really right, appreciate

Todd Brooks

we see next everybody Thank And will time. absolutely. Yes, you.

FalconStor Software (FALC) 15 Mar 232022 Q4 Earnings call transcript