FalconStor: Fiscal 1Q14 Financial Results

FalconStor Software, Inc. announced financial results for its first quarter ended March 31, 2014.

“In the first quarter of 2014 the FalconStor team continued to achieve the internal goals that we set for ourselves last year. Virtually all of our metrics for bookings, deferred revenue, cash flow and expense control met the targets that we put in place in the previous quarter,” said Gary Quinn, president and CEO. “We continue to execute our business plan for 2014: To increase our total bookings, while being cost conscious and preserving our cash. We are gaining momentum and we remain optimistic for the future. Among the highlights of the quarter was the first delivery of our new unified technology platform-based approach to data management, on which we will continue to build.”

Financial Highlights:

• Q1 2014 bookings totaled $14.4 million compared with $14.8 million in Q1 2013 and $16.3 million in Q4 2013.
• Deferred revenue as of March 31, 2014 totaled $31.9 million which was an increase of 34% compared with March 31, 2013, and an increase of 7% compared with December 31, 2013.
• The company achieved positive cash flow from operations on a GAAP basis in Q1 2014 of $0.3 million compared with cash used in operations of ($1.8) million in Q1 2013 and cash used in operations of ($3.6) million in Q4 2013;
• Closed the quarter with $27.9 million of cash, cash equivalents and marketable securities, compared with $28.1 million at December 31, 2013.

During the first quarter of 2014:

• The company made $0.6 million in payments associated with the company-wide ‘rebalancing’ which commenced during the third quarter of 2013; and
• The company made $0.2 million in payments related to the preferred stock dividends accrued for at December 31, 2013.

Non-GAAP expenses totaled $13.9 million in Q1 2014 compared with non-GAAP expenses of $18.2 million in Q1 2013 and non-GAAP expenses of $13.8 million in Q4 2013.

Non-GAAP gross margins were 78% in Q1 2014 compared with non-GAAP gross margins of 72% in Q1 2013 and non-GAAP gross margins of 78% in Q4 2013.

The company launched its Optimized Backup and Deduplication Solution version 8.0 – the first delivery of the company’s new unified technology platform-based approach to data management.

Financials
Total revenues for the first quarter of 2014 were $12.0 million compared with $15.3 million in the same period a year ago. GAAP loss from operations for the first quarter of 2014 was narrowed to $2.6 million, compared with an operating loss of $3.9 million for the first quarter of 2013. GAAP net loss for the quarter improved to $2.8 million compared with a net loss of $4.4 million for the same period a year ago. Net loss attributable to common stockholders for the quarter, which includes the effects of the accretion to redemption value of the Series A preferred stock and the accrual of preferred stock dividends, was $3.1 million, or $0.06 per share, compared with $4.4 million, or $0.09 per share, for the same period a year ago. Included in the operating results for the first quarter of 2014 and 2013 were expenses of $0.1 million of investigation, litigation and settlement related costs. In addition, included in net loss for the first quarter of 2014 was $0.2 million related to restructuring charges.

Non-GAAP loss from operations narrowed to $1.9 million for the first quarter of 2014, compared with non-GAAP loss from operations of $2.9 million for the same period a year ago. Non-GAAP net loss improved to $2.1 million, or $0.04 per share, in the first quarter of 2014, compared with a non-GAAP net loss of $3.4 million, or $0.07 per share, in the first quarter of 2013. Non-GAAP results exclude the effects of stock-based compensation, costs associated with the company’s investigations, litigation and settlement related costs, restructuring costs and the effects of preferred stock.

The company closed the quarter with $27.9 million in cash, cash equivalents and marketable securities. Cash flow from operations for the first quarter of 2014 was $0.3 million compared with cash used in operations of ($1.8) million during the same period in 2013. Deferred revenue at March 31, 2014 was $31.9 million, compared with $29.8 million at December 31, 2013.