FalconStor: Fiscal 4Q18 Financial Results
Revenue down 29% for FY18 at only $18 million
This is a Press Release edited by StorageNewsletter.com on March 27, 2019 at 2:23 pm| (in $ million) | 4Q17 | 4Q18 | FY17 | FY18 |
| Revenue | 6.3 | 4.8 | 25.2 | 17.8 |
| Growth | -24% | -29% | ||
| Net income (loss) | 1.4 | (0.1) | 1.1 | (0.1) |
FalconStor Software, Inc. announced financial results for its fourth quarter ended December 31, 2018.
Key Financial Highlights for 4FQ18:
• Achieved Non-GAAP operating income of $0.7 million, marking the sixth consecutive quarter of non-GAAP operating profitability.
• On October 9, 2018, closed on the final tranche of previously announced financing of units, providing the company an additional $1,000,000 of gross proceeds from new investors.
• Cash and cash equivalents increased to $3.1 million from $1.0 million at December 31, 2017.
Key Highlights
• FreeStor solution was renamed FalconStor Data Mastery Platform to reflect the product’s value proposition for large enterprises with complex IT environments. It includes native cloud functionality, newly validated for AWS and in the validation process for additional public cloud services.
• VTL with deduplication solution was validated for AWS S3, enabling customers to migrate virtual tapes to AWS S3 object storage to achieve low-cost tape archive in the cloud.
• Accomplished moving 100% of go-to-market through the channel, and deepening relationships with existing partners and recruiting and welcoming new partners.
“I am pleased with the operating profitability which continued through the fourth quarter, and the growth delivered in our Americas and EMEA regions,” said Todd Brooks, CEO, FalconStor. “Momentum going into 2019 is positive as billings in our Americas and EMEA markets increased 21% and 40%, respectively, as compared to 4FQ17.“
Additional Financial Highlights for 4FQ18
While non-GAAP operating income was $0.7 million for the quarter, the company recorded a GAAP net loss for the three months ended December 31, 2018 of $0.4 million, as compared to GAAP net income of $1.1 million for the same period of the previous year, in part as a result of the impact of new revenue recognition guidance, in addition to other non cash restructuring charges incurred in connection with cost reduction efforts.
Overall, total revenue for the three months ended December 31, 2018 was $4.8million as compared to $6.3 million in the prior year period. This decline in revenue was impacted by the adoption of new revenue recognition accounting guidance under Topic 606 on January 1, 2018 using the modified retrospective transition method, which resulted in a $1.2 million decrease in revenue.
Net cash used by operations decreased by $1.1 million to $1.5 million for the twelve months ended December 31, 2018, as compared to $2.6 million of net cash used by operations for the twelve months ended December 31, 2017.
FalconStor ended the quarter with $3.1 million of cash and cash equivalents, as compared to $1.0 million at December 31, 2017.
Comments
Sales for the last three-month period are up 17% Q/Q but down $24% Y/Y, decreasing by 29% from FY17 to FY18, reaching only $17.8 million after 18 years of business, lowest figure since at least FY04.
The company is shrinking especially since FY10 and is now far below FY09 sales at $89.5 million.
| FY | Annual revenue in $ million |
Growth |
| 2004 | 28.7 | NA |
| 2005 | 41.0 | 43% |
| 2006 | 55.1 | 34% |
| 2007 | 77.4 | 41% |
| 2008 | 87.0 | 12% |
| 2009 | 89.5 | 3% |
| 2010 | 82.8 | -7% |
| 2011 | 82.9 | 0% |
| 2012 | 75.4 | -9% |
| 2013 | 58.6 | -32% |
| 2014 | 46.3 | -21% |
| 2015 | 48.6 | 5% |
| 2016 | 30.3 | -38% |
| 2017 | 25.2 | -17% |
| 2018 | 17.8 | -29% |
But 4FQ18 marks the sixth consecutive quarter of profitable operating margin.
No guidance was revealed.
During 4FQ18, the software company focused on three initiatives:
1/ continued delivery of operating profitability
2/ generating year-over-year billings growth, and
3/ key product expansion.
The firm generates 21% Y/Y growth in Americas region, and 40% billings growth in EMEA.
This growth largely offsets the 4FQ18 billings decline the company continued to experience in APAC, especially within China.
To read the earnings call transcript
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