|
| [May 03, 2012] |
 |
FalconStor Software Reports First Quarter Financial Results
MELVILLE, N.Y. --(Business Wire)--
FalconStor (News - Alert) Software, Inc. (NASDAQ: FALC), the provider of disk-based
data protection solutions, today announced financial results for its
first quarter ended March 31, 2012.
Total revenues for the first quarter of 2012 increased by over 2% to
$19.4 million, compared with $19.0 million in the same period a year
ago. GAAP loss from operations for the first quarter of 2012 was $2.1
million, compared with loss from operations of $5.7 million for the same
period a year ago. GAAP net loss for the quarter was $2.4 million, or
$0.05 per share compared with a net loss of $6.0 million, or $0.13 per
share for the same period a year ago. Included in the operating results
for the first quarter of 2012 was a net reduction of the costs
associated with the ongoing government investigations of $1.3 million.
The $1.3 million was comprised of a $1.7 million reduction in the
accrual for certain costs associated with the possible resolution of the
investigations from $7.5 million to $5.8 million, less $0.4 million in
legal fees associated with the investigations in the quarter. During the
same period in 2011, the Company had $2.6 million of costs associated
with the ongoing government investigations, comprised of $1.1 million of
legal fees and an accrual of $1.5 million for certain costs associated
with the possible resolution of the government investigations.
Non-GAAP loss from operations was $1.9 million in the first quarter of
2012, compared with Non-GAAP loss from operations of $1.7 million for
the same period a year ago. Non-GAAP net loss was $2.3 million, or $0.05
per share, in the first quarter of 2012, compared with Non-GAAP net loss
of $2.0 million, or $0.04 per share, in the first quarter of 2011.
Non-GAAP results exclude the effects of costs associated with the
ongoing government investigations and stock-based compensation net of
the related income taxes, when applicable.
The Company closed the quarter with $37.6 million in cash, cash
equivalents, and marketable securities, down $0.2 million from December
2011. Cash flow from operations for the first quarter of 2012 was $0.4
million. Deferred revenue at March 31, 2012 was $27.9 million, an
increase of 9% compared with the same period a year ago.
"I am pleased that our business continues to grow and that it
outperformed our Q1 results from last year, despite the reduction in our
legacy OEM business," said Jim McNiel, president and CEO of FalconStor
Software. "We continue to see growth and momentum in our global channel,
particularly in the Asia-Pacific region. We recently launched our
award-winning PartnerChoice program in Asia, which further strengthens
our commitment to both the Asia-Pacific region and our global channel
business. We look forward to carrying this momentum forward for the rest
of 2012."
The Company will host a conference call to discuss its financial results
on Thursday, May 3, 2012 at 4:30 p.m. EDT. To participate in the
conference call, please dial:
Toll Free: 1-877-941-6010
International: 1-480-629-9723
To view the presentation, please copy and paste the following link into
your browser and register for this meeting. Once you have registered for
the meeting, you will receive an email message confirming your
registration.
https://falconstor.webex.com/falconstor/j.php?ED=165628657&RG=1&UID
Meeting: FalconStor Q1 2012 Earnings
Meeting password: q1numbers
Meeting
Number: 760 247 967
If you are unable to register via the Internet, please contact Joanne
Ferrara, Investor Relations at 631-773-5813 or joanne.ferrara@falconstor.com.
A conference call replay is scheduled to be available beginning May 3 at
6:30 p.m. EDT through 11:59 p.m. EDT on May 8. To listen to the replay
of the call, dial toll free: 1-800-406-7325 or International:
+1-303-590-3030, passcode: 4533146, or visit our website at www.falconstor.com/investors.
Non-GAAP Financial Measures
The non-GAAP financial measures used in this press release are not
prepared in accordance with generally accepted accounting principles and
may be different from non-GAAP financial measures used by other
companies. The Company's management refers to these non-GAAP financial
measures in making operating decisions because they provide meaningful
supplemental information regarding the Company's operating performance.
In addition, these non-GAAP financial measures facilitate management's
internal comparisons to the Company's historical operating results and
comparisons to competitors' operating results. We include these non-GAAP
financial measures (which should be viewed as a supplement to, and not a
substitute for, their comparable GAAP measures) in this press release
because we believe they are useful to investors in allowing for greater
transparency into the supplemental information used by management in its
financial and operational decision-making. The non-GAAP financial
measures exclude (i) costs associated with the Company's ongoing
government investigations, and (ii) noncash stock-based compensation
charges and any potential tax effects, when applicable. For a
reconciliation of our GAAP and non-GAAP financial results, please refer
to our Non-GAAP Operating Data GAAP Reconciliation, presented in this
release.
About FalconStor
FalconStor Software, Inc. (NASDAQ: FALC) is a market leader in
disk-based data protection. The company's mission is to transform
traditional backup and disaster recovery (DR) into next-generation
service-oriented data protection. Built upon an award-winning platform,
FalconStor solutions deliver disk-based
backup, continuous
data protection, WAN-optimized
replication and DR
automation. FalconStor solutions are available through a worldwide
network of partners, including solution providers, top-tier strategic
partners and major OEMs. Thousands of customers worldwide, from small
businesses to Fortune 100 enterprises, entrust their data to FalconStor
solutions. FalconStor maintains headquarters in Melville, N.Y., and
offices throughout Europe and the Asia Pacific region. For more
information, visit www.falconstor.com
or call 1-866-NOW-FALC (866-669-3252).
###
This press release includes forward-looking statements that involve risk
and uncertainties that could cause actual results to differ materially
from the forward-looking statements. These risks and uncertainties
include: delays in product development; market acceptance of
FalconStor's products and services; technological change in the data
protection industry; competition in the data protection market; results
and costs associated with governmental investigations; intellectual
property issues; and other risk factors discussed in FalconStor's
reports on Forms 10-K, 10-Q and other reports filed with the Securities
and Exchange Commission.
FalconStor and FalconStor Software are registered trademarks of
FalconStor Software, Inc. in the US and other countries. All other
company and product names contained herein may be trademarks of their
respective holders.
|
|
|
|
|
|
|
FalconStor Software, Inc. and Subsidiaries
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
March 31,
2012
|
|
December 31,
2011
|
|
|
|
(unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
16,375,267
|
|
$
|
16,257,694
|
|
Marketable securities
|
|
|
20,668,767
|
|
|
20,894,328
|
|
Accounts receivable, net
|
|
|
14,055,103
|
|
|
19,314,789
|
|
Prepaid expenses and other current assets
|
|
2,020,487
|
|
|
1,912,831
|
|
Inventory
|
|
|
2,193,166
|
|
|
1,769,007
|
|
Deferred tax assets, net
|
|
|
158,525
|
|
|
177,798
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
55,471,315
|
|
|
60,326,447
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
3,770,298
|
|
|
4,364,180
|
|
Long-term marketable securities
|
|
|
543,824
|
|
|
611,082
|
|
Deferred tax assets, net
|
|
|
213,807
|
|
|
217,771
|
|
Software development costs, net
|
|
|
1,331,010
|
|
|
1,001,530
|
|
Other assets, net
|
|
|
2,220,106
|
|
|
2,183,973
|
|
Goodwill
|
|
|
4,150,339
|
|
|
4,150,339
|
|
Other intangible assets, net
|
|
|
185,309
|
|
|
191,572
|
|
|
|
|
|
|
|
|
Total assets
|
|
$ 67,886,008
|
|
$
|
73,046,894
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
2,373,333
|
|
$
|
2,883,844
|
|
Accrued expenses
|
|
|
13,096,846
|
|
|
17,609,766
|
|
Deferred revenue, net
|
|
|
20,421,248
|
|
|
19,450,966
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
35,891,427
|
|
|
39,944,576
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
2,621,727
|
|
|
2,587,327
|
|
Deferred revenue, net
|
|
|
7,433,461
|
|
|
7,698,053
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
45,946,615
|
|
|
50,229,956
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
21,939,393
|
|
|
|
22,816,938
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
67,886,008
|
|
|
$
|
73,046,894
|
|
|
|
FalconStor Software, Inc. and Subsidiaries
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Product revenues
|
|
$
|
10,662,953
|
|
|
$
|
11,259,015
|
|
|
Support and services revenues
|
|
|
8,705,119
|
|
|
|
7,700,247
|
|
|
|
|
|
19,368,072
|
|
|
|
18,959,262
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
Product
|
|
|
2,020,486
|
|
|
|
1,723,006
|
|
|
Support and service
|
|
|
3,161,356
|
|
|
|
3,119,219
|
|
|
Total cost of revenues
|
|
|
5,181,842
|
|
|
|
4,842,225
|
|
|
Gross profit
|
|
$
|
14,186,230
|
|
|
$
|
14,117,037
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Research and development costs
|
|
|
4,700,595
|
|
|
|
6,104,988
|
|
|
Selling and marketing
|
|
|
9,763,225
|
|
|
|
8,474,093
|
|
|
General and administrative
|
|
|
3,110,875
|
|
|
|
2,601,535
|
|
|
Investigation costs
|
|
|
(1,290,920
|
)
|
|
|
2,611,120
|
|
|
Total operating expenses
|
|
|
16,283,775
|
|
|
|
19,791,736
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Loss
|
|
|
(2,097,545
|
)
|
|
|
(5,674,699
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other (loss) income, net
|
|
|
(139,331
|
)
|
|
|
300,950
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(2,236,876
|
)
|
|
|
(5,373,749
|
)
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
212,532
|
|
|
|
592,516
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,449,408
|
)
|
|
$
|
(5,966,265
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net loss per share
|
|
$
|
(0.05
|
)
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
Diluted net loss per share
|
|
$
|
(0.05
|
)
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
|
Weighted average basic shares
|
|
|
|
|
|
|
|
|
|
outstanding
|
|
|
47,044,482
|
|
|
|
46,261,472
|
|
|
Weighted average diluted shares
|
|
|
|
|
|
|
|
|
|
outstanding
|
|
|
47,044,482
|
|
|
|
46,261,472
|
|
|
|
|
FalconStor Software, Inc. and Subsidiaries
|
|
Reconciliation of GAAP to Non-GAAP Financial Measures
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from operations
|
|
$
|
(2,097,545
|
)
|
|
$
|
(5,674,699
|
)
|
|
Add: Non-cash stock option expense (1)
|
|
|
|
1,448,302
|
|
|
|
1,314,947
|
|
|
Investigation related costs (3)
|
|
|
(1,290,920
|
)
|
|
|
2,611,120
|
|
|
Non-GAAP loss from operations
|
|
|
(1,940,163
|
)
|
|
|
(1,748,632
|
)
|
|
|
|
|
|
|
|
GAAP net loss
|
|
$
|
(2,449,408
|
)
|
|
$
|
(5,966,265
|
)
|
|
Add: Non-cash stock option expense,
|
|
|
|
|
|
net of income taxes (2)
|
|
|
1,448,302
|
|
|
|
1,314,947
|
|
|
Investigation related (3)
|
|
|
(1,290,920
|
)
|
|
|
2,611,120
|
|
|
Non-GAAP net loss
|
|
|
(2,292,026
|
)
|
|
|
(2,040,198
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin - Product
|
|
|
81
|
%
|
|
|
85
|
%
|
|
Add: Non-cash stock option expense (1)
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Non-GAAP gross margin - Product
|
|
|
81
|
%
|
|
|
85
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin - Support
|
|
|
|
|
|
|
|
|
|
and Service
|
|
|
64
|
%
|
|
|
59
|
%
|
|
Add: Non-cash stock option expense (1)
|
|
|
1
|
%
|
|
|
2
|
%
|
|
Non-GAAP gross margin - Support
|
|
|
|
|
|
|
|
|
|
and Service
|
|
|
65
|
%
|
|
|
61
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating margin
|
|
|
(11
|
%)
|
|
|
(30
|
%)
|
|
Add: Non-cash stock option expense (1)
|
|
|
7
|
%
|
|
|
7
|
%
|
|
Investigation related costs (3)
|
|
|
(7
|
%)
|
|
|
14
|
%
|
|
Non-GAAP operating margin
|
|
|
(10
|
%)
|
|
|
(9
|
%)
|
|
|
|
|
|
|
|
GAAP Basic EPS
|
|
|
(0.05
|
)
|
|
|
(0.13
|
)
|
|
Add: Non-cash stock option expense,
|
|
|
|
|
|
|
|
|
|
net of income taxes (2)
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
Investigation related costs (3)
|
|
|
(0.03
|
)
|
|
|
0.06
|
|
|
Non-GAAP Basic EPS
|
|
|
(0.05
|
)
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
GAAP Diluted EPS
|
|
|
(0.05
|
)
|
|
|
(0.13
|
)
|
|
Add: Non-cash stock option expense,
|
|
|
|
|
|
|
|
|
|
net of income taxes (2)
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
Investigation related costs (3)
|
|
|
(0.03
|
)
|
|
|
0.06
|
|
|
Non-GAAP Diluted EPS
|
|
|
(0.05
|
)
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
Weighted average basic shares
|
|
|
|
|
|
|
|
|
|
Outstanding (GAAP and as adjusted)
|
|
|
47,044,482
|
|
|
|
46,261,472
|
|
|
Weighted average diluted shares
|
|
|
|
|
|
|
|
|
|
Outstanding (GAAP and as adjusted)
|
|
|
47,044,482
|
|
|
|
46,261,472
|
|
|
Footnotes:
|
|
(1)
|
|
Represents non-cash, stock-based compensation charges as follows:
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
Cost of revenues - Product
|
|
$
|
49
|
|
$
|
732
|
|
Cost of revenues - Support and Service
|
|
|
70,969
|
|
|
143,487
|
|
Research and development costs
|
|
|
318,958
|
|
|
479,042
|
|
Selling and marketing
|
|
|
486,625
|
|
|
422,724
|
|
General and administrative
|
|
|
571,701
|
|
|
268,962
|
|
|
|
|
|
|
|
Total non-cash stock-based
|
|
|
|
|
|
compensation expense
|
|
$
|
1,448,302
|
|
$
|
1,314,947
|
|
(2)
|
|
Represents the effects of non-cash stock-based compensation expense
recognized in accordance with the FASB Accounting Standards
Codification, Topic 718, net of related income tax effects. For the
three months ended March 31, 2012 and 2011, the tax expense for both
GAAP and Non-GAAP basis approximate the same amount.
|
|
(3)
|
|
Represents investigation related costs totaling ($1,290,920) and
$2,611,120 for the three months ended March 31, 2012 and 2011,
respectively.
|
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