AUSTIN, TX – March 12, 2020 — / — FalconStor Software, Inc. (OTCQB: FALC), a market leader in data protection software for global enterprises, today announced financial results for its fourth quarter ended December 31, 2019.

Key Financial Highlights for the Close of Fiscal 2019:

  • Continued to demonstrate the growth potential of our innovative and modern long-term archive retention and reinstatement product with 38% sales growth compared to 2018,
  • Increased new customer sales year-over-year by 22% across all product lines compared to 2018
  • Achieved total year-over-year sales growth of more than 6% in our core regions, which excludes China, compared to 2018,
  • Intentionally reduced our sales exposure in China to 3% of total sales in 2019 from 12% in 2018,
  • Entered into an amendment to our term loan on December 27, 2019, providing the Company with an additional $1,000,000 of gross proceeds for operations and R&D investment.

Key Product Highlights

  • Continued investment in our patent-pending next generation long-term archive retention and reinstatement product, StorSafe, scheduled for launch in 1H 2020,
  • Released our expanded unified management and analytics console, StorSight which integrates with all FalconStor products,
  • Expanded partnerships with cloud storage providers, object storage providers, and managed service providers.

“The strategic decisions we made throughout 2019 to place additional commercial focus on our long-term archive retention and reinstatement product, within our core regions, delivered encouraging growth in those areas throughout 2019, and has created a focused and healthy foundation for continued growth in 2020”, said Todd Brooks, CEO FalconStor. “According to IDC, up to 75% of data managed by an enterprise is directly related to routine data backup and archive. Our long-term archive retention and reinstatement solution allows an enterprise to leverage existing backup policies and procedures, while ensuring the most stringent backup window is met, data storage capacity is reduced by up to 95%, and Cloud and Object storage alternatives such as Hitachi Content Platform (HCP), Wasabi, IBM-COS, AWS, and Azure are available for improved data storage efficiency.”

“To build upon the foundation we have built, I am excited by the progress our team has made in developing our next generation long-term archive retention and reinstatement product, StorSafe, which will retain the core benefits of our existing product, while adding innovative multi-cloud archive data storage orchestration capabilities to dramatically reduce storage costs, improve security, simplify compliance, and streamline archive data portability. Archive data is critical for the modern enterprise, not only in terms of risk and compliance management, but also in terms of active use of archive data for strategic advantage.  StorSafe™ is scheduled for beta launch in the first half of 2020.”

Additional Financial Highlights for the Fourth Quarter 2019
While we delivered a 6% sales increase within our core regions, which excludes China, total global sales revenue for the three months ended December 31, 2019 decreased to $4.1 million compared to $4.8 million in the prior year. This global revenue decrease was primarily driven by our intentional strategy to decrease commercial focus in China, and work to refocus development efforts within our business continuity driven data replication products to those enhancements and innovations aligned with our largest and most strategic customers.

Overall, our total operating expenses decreased 7.1% from $3.6 million for the quarter ended December 31, 2018 to $3.3 million for the quarter ended December 31, 2019.  This decrease was primarily attributable to tighter expense controls and overall operational efficiencies which better align our current business plan on a run-rate basis. These efficiencies include among other items, stream-lined personnel related costs, global overhead costs and efficiencies realized on our redesigned go-to-market coverage models. We will continue to evaluate the appropriate headcount levels to properly align our resources with our current and long-term outlook and to take actions in areas of the Company that are not performing.

Total cost of revenue decreased 77.7% to $0.2 million for the three months ended December 31, 2019, compared with $0.9 million for the same period of the year.  Cost of sales during the current quarter reflects a cumulative $0.4 million one time correction to properly eliminate intercompany transfer pricing adjustments associated with our Asia Pacific sales during the previous three quarters of the current year.  Excluding this correction, we recorded $0.6 million in cost of sales, compared to $0.9 million during the fourth quarter of 2018.

During the three months ended December 31, 2019, we recorded GAAP Operating Income of $0.6 million, compared to GAAP Operating Income of $0.3 million for the prior year period.

We ended the quarter with $1.5 million of cash and cash equivalents, compared to $3.1 million at December 31, 2018.

On August 6, 2019, following stockholder approval, the Company filed a certificate of amendment (which was effective August 8, 2019) to the Company’s Restated Certificate of Incorporation, as amended, with the Delaware Secretary of State to reduce the authorized shares of common stock, $.001 par value per share, to 30,000,000.  In connection with this event, the Company effected a 100-for-1 reverse stock split of its issued and outstanding common stock. The par value and authorized shares of common stock were not adjusted as a result of the reverse stock split. All of the share and per share information presented in the accompanying financial statements have been adjusted to reflect, unless otherwise stated, the reverse common stock split on a retroactive basis for all periods and as of all dates presented.

Conference Call  and Webcast Information
The Company will host a conference call to discuss its financial results on Thursday, March 12, 2020 at 3:30 p.m. CDT. To participate in the conference call, please dial:

Toll Free: 1-800-367-2403
International: 1-334-777-6978
Conference ID: 9722775

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.

A conference call replay will be available beginning March 12th at 6:30 PM CDT through 6:30 PM CDT on March 19th. To listen to the replay of the call, dial:

Toll Free: 1-888-203-1112
International: 1-719-457-0820
Passcode: 9722775

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) restructuring costs, (ii) effects of our Series A redeemable convertible preferred stock, and (iii) non-cash stock-based compensation charges and any potential tax effects. 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 Software
FalconStor Software, Inc (OTCQB: FALC) is a technology company whose mission is to deliver technical innovation that creates investment protection, flexibility, and leverage of modern cloud-based technologies for our enterprise customers.  We provide software and cloud services that enable our enterprise customers to better manage, protect, secure, and make use of their valuable data.  Our customers achieve lower costs, simpler operations, greater data security, higher confidence in their business continuity, and greater ability to effectively use their data assets to drive innovation.

Founded in 2000, FalconStor is headquartered in Austin, Texas and has additional offices in New York, Europe and Asia. Our solutions are available and supported by a vast network of system integrators and resellers. For more information, please visit

FalconStor and FalconStor Software are trademarks or registered trademarks of FalconStor Software, Inc., in the U.S. and other countries. All other company and product names contained herein may be trademarks of their respective holders.

Links to websites or pages controlled by parties other than FalconStor are provided for the reader’s convenience and information only. FalconStor does not incorporate into this release the information found at those links nor does FalconStor represent or warrant that any information found at those links is complete or accurate. Use of information obtained by following these links is at the reader’s own risk.

For detailed financial report, visit:

For more information, contact:
Brad Wolfe
Chief Financial Officer
FalconStor Software Inc.

Source: FalconStor Software, Inc.