FalconStor: Fiscal 2Q09 Financial Results

FalconStor Software, Inc. announced financial results for its second quarter ended June 30, 2009.

Revenues for the second quarter of 2009 increased 10% to $24.5 million, compared with $22.2 million for the same period a year ago. GAAP income from operations for the quarter was $0.3 million, compared with $0.8 million in the second quarter of 2008. GAAP net income for the quarter was $1.3 million, or $0.03 per diluted share, compared with $0.8 million, or $0.02 per diluted share, in the second quarter of 2008. Stock-based compensation expense was $2.3 million in the second quarter of 2009 and $2.6 million in the second quarter of 2008. The income tax provision for the second quarter of 2009 included a benefit of $0.9 million related to research and development tax credits.

Non-GAAP income from operations was $2.6 million in the second quarter of 2009, compared with $3.4 million in the second quarter of 2008. Non-GAAP net income was $2.9 million, or $0.06 per diluted share, in the second quarter of 2009, compared with $2.5 million, or $0.05 per diluted share, in the second quarter of 2008. Non-GAAP results exclude the effects of stock-based compensation expense net of the related income taxes.

For the six months ended June 30, 2009, revenues increased to $45.5 million, compared with $44.0 million for the same period a year ago. GAAP loss from operations for the six month period was $0.6 million compared with income from operations of $2.5 million in 2008. GAAP net income was $0.4 million, or $0.01 per diluted share for the six months ended June 30, 2009, compared with $2.1 million, or $0.04 per diluted share, in the same period a year ago. For the first six months of 2009, the income tax provision included a benefit of $0.9 million related to research and development tax credits. Stock-based compensation expense was $4.5 million in 2009 and $5.0 million in 2008.

Non-GAAP income from operations was $3.9 million for the six months ended June 30, 2009, compared with $7.5 million in 2008. Non-GAAP net income was $3.5 million, or $0.08 per diluted share, compared with $5.4 million, or $0.11 per diluted share in the same period a year ago. Non-GAAP results exclude the effects of stock-based compensation expense net of the related income taxes.

The Company closed the quarter with $38.1 million in cash, cash equivalents and marketable securities. Deferred revenue at the end of the quarter was $21.3 million.

For the year ending December 31, 2009,
the Company still anticipates:

• Revenues to be in the range of $96 million to $100 million
• Non-GAAP net income to be between $0.18 and $0.21 per diluted share, which excludes stock-based compensation, net of income taxes.

"We are pleased with the performance of our business from operational, financial and strategic perspectives," said ReiJane Huai, chairman and CEO of FalconStor Software. "Our ongoing investment in R&D and our pro-active expansion of field sales and support capacity enable our channel partners to deliver Totally Open storage virtualization, continuous data protection, and deduplication solutions with compelling business advantages. Our continued growth should encourage more industry partners to leverage our state-of-the-art software to enhance their network storage solutions supported by our global support infrastructure."