FalconStor: Fiscal 4Q09 Financial Results

(in US$ millions)	4Q08	4Q09	FY08	FY09
Revenues	23.4	22.4	87.0	89.5
Growth		-14%		3%
Net income (loss)	0.6	(1.5)	1.2	(3.1)

                   
FalconStor Software, Inc. announced financial results for its fourth quarter and full year ended December 31, 2009.

Revenues for the fourth quarter of 2009 were $22.4 million, compared with $23.4 million for the same period a year ago. GAAP loss from operations for the quarter was $3.3 million, compared with a loss of $0.2 million in the fourth quarter of 2008. GAAP net loss for the quarter was $1.5 million, or $0.03 per basic share, compared with net income of $0.6 million, or $0.01 per diluted share, in the fourth quarter of 2008. Stock-based compensation expense was $2.1 million in the fourth quarter of 2009 and $2.5 million in the fourth quarter of 2008.

Non-GAAP loss from operations was $1.2 million in the fourth quarter of 2009, compared with operating income of $2.3 million for the same period a year ago. Non-GAAP net loss was $0.8 million or $0.02 per share in the fourth quarter of 2009, compared with net income of $2.0 million, or $0.04 per diluted share, in the fourth quarter of 2008. Non-GAAP results exclude the effects of stock-based compensation expense net of the related income taxes.

For the year ended December 31, 2009, revenues increased 3 percent to $89.5 million, compared with $87.0 million for the same period a year ago. GAAP loss from operations for 2009 was $6.3 million compared with income from operations of $1.0 million in 2008. GAAP net loss was $3.1 million, or $0.07 per share for the year ended December 31, 2009, compared with net income of $1.2 million, or $0.02 per diluted share, in the same period a year ago. Stock-based compensation expense was $8.8 million in 2009 and $9.1 million in 2008.

Non-GAAP income from operations was $2.5 million for the year ended December 31, 2009, compared with $10.1 million in 2008. Non-GAAP net income was $2.8 million in 2009, or $0.06 per diluted share, compared with $7.8 million, or $0.16 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 year with $41.8 million in cash, cash equivalents, and marketable securities. Cash flow from operations for the full year was $8.8 million. Deferred revenue at December 31, 2009 was $22.2 million.

“Though revenues for fiscal year 2009 fell short of projections, our revenues continued to grow in one of the slowest economies in decades,” said ReiJane Huai, chairman and CEO of FalconStor Software. "Our investment in global non-OEM channels has produced 15 percent annual software revenue growth by enabling our partners to deliver storage virtualization, deduplication and continuous data protection solutions with compelling price/performance ratio and profit margins. We are confident in our ability to accelerate sales and earnings growth by leveraging the channel momentum, strategic alliances, product innovations and credible enterprise references.”

“FalconStor is well positioned to deliver a comprehensive suite of data protection solutions,” said Jim McNiel, chief strategy officer of FalconStor Software. “The careful packaging and positioning of these technically advanced offerings will help to move FalconStor firmly into the $10 billion storage management market.”