FalconStor: Fiscal 1Q22 Financial Results
Sales decreasing at $2 million and $1.1 million net loss
This is a Press Release edited by StorageNewsletter.com on May 12, 2022 at 2:02 pm| (in $ million) | 1Q21 | 1Q22 | Growth |
| Revenue |
3.8 | 2.0 | -47% |
| Net income (loss) | 0.4 | (1.1) |
FalconStor Software, Inc. announced financial results for its first quarter 2022, which ended on March 31, 2022.
“Our strategic shift to recurring revenue-based hybrid cloud data protection solutions took a material step forward in the quarter as we worked aggressively to secure an important reseller relationship with IBM,” said Todd Brooks, CEO. “IBM’s cloud push has been a centerpiece of its corporate strategy, as highlighted in its first quarter 2022 results. As we announced earlier today, enterprises can now leverage new joint hybrid cloud solutions from FalconStor and IBM. These solutions are especially important to the tens of thousands of companies around the globe that leverage IBM i environments, as they now have the ability to securely backup and restore to the cloud as well as migrate their IBM i workloads to IBM Power VS Cloud with secure backup and recovery on an on-going basis.”
“Despite the importance of this step forward in our efforts to reinvent FalconStor, our aggressive focus on advancing critical hybrid cloud relationships and our efforts to realign our sales team accordingly negatively impacted our legacy on-premises expansions and legacy on-premises new customer acquisition revenue during the quarter. We don’t view our poor legacy results in Q1 as being a signal of accelerated legacy decline in the future,” he stated. “In fact, legacy recurring revenue renewal rates were 86% and ARR increased 4% Y/Y during the quarter. As we continue to reinvent FalconStor, we must simultaneously focus on driving new strategic hybrid cloud ARR growth and maintaining a solid legacy on-premises revenue base.”
1FQ22 Financial Results
• Annual Recurring Revenue (ARR): 4% Y/Y growth
• Ending Cash: $3.4 million, compared to $2.0 million in 1FQ21
• Total Revenue: $2.0 million, compared to $3.8 million in 1FQ21
• Total Cost of Revenue: $0.4 million, compared to $0.6 million in 1FQ21
• Total Operating Expenses: $2.7 million, compared to $3.2 million in 1FQ21
• GAAP Net Income (Loss): $(1.1) million, compared to $0.4 million in 1FQ21
Guidance
Given 1FQ22 results, the company is reducing FY22 guidance as follows:
- Revenue between $13.0 and 14.0 million
- Net Income between $0.8 and $1.4 million
Comments
Expectation of $14.2 million announced at the end of 4Q21 was the lowest fiscal year revenue since as far as FY04, down 4% Y/Y, and this time outlook for FY22 is even worst: $13.0 and 14.0 million or -8% to -1% Y/Y, but with net income expected between $0.8 and $1.4 million.
$2 million for the most recent quarter, or as much as -$47% Y/Y or Q/Q , is maybe the lowest figure never seen.
For FY22, the firm implemented 4 key initiatives:
1/ Generating consistent growth by expanding its long-term data retention and recovery product line; thereby bringing new, flexible, and extensible data protection innovations that the firm believes will drive recurring revenue growth over the next decade.
2/ On sharpening commercial and R&D focus, related to company's BC driven data replication products to ensure that it is focused on those used cases, which are most important to its largest and strategic enterprise customers.
3/ FalconStor is beginning to generate growth via M&A.
4/ It is continuing to deliver consistent profitability.
ARR for the quarter did grow 4.4% Y/Y and over the last 5 quarters, the rate at which ARR is growing Y/Y is increasing and the software company expects that naturally to continue that trend.
As a percentage of total revenue by the end of 1FQ22 where ARR was 62% of total revenue and that also is increased over time, it will increase as the firm build in more and more recurring revenue through its hybrid cloud focus.
The big disappointment of the quarter though was total GAAP revenue down 46%,
Legacy renewals did stay strong at 86% for the quarter.
1FQ22 operating expenses were down to $2.7 million.
At the end of the quarter, cash balance was $3.4 million compared to $3.2 on December 31, 2021 and compared to $2 million at March 31, 2021. Therefore an increase of $200,000 over 4FQ21 and an increase of $1.4 million over 1FQ21.
| FY | 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% |
| 2019 | 16.5 | -7% |
| 2020 | 14.8 | -10% |
| 1FQ21 | 3.8 | 20% |
| 2FQ21 | 3.3 | -7% |
| 3FQ21 | 3.3 | -25% |
| 4FQ21 | 3.8 | 4% |
| FY21 | 14.2 | -4% |
| 1FQ22 | 2.0 | -47% |
| FY22 (estim.) | 13.0 - 14.0 | -8% - -1% |
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