FalconStor: Fiscal 2Q10 Financial Results

(in US$ millions)	2Q09	2Q10	6 mo. 09	6 mo. 10
Revenues	24.5	20.3	45.5	37.4
*Growth*		-17%		*-18%*
Net income (loss)	1.3	(3.4)	0.4	(8.9)

FalconStor Software, Inc. announced financial results for its second quarter ended June 30, 2010.

Revenues for the second quarter of 2010 were $20.3 million, an increase of 18% over the previous quarter and down 17% compared to the same period a year ago.

GAAP loss from operations for the second quarter of 2010 was $5.1 million, down from $8.5 million in the previous quarter. GAAP operating income in the second quarter of 2009 was $0.3 million. GAAP net loss for the second quarter of 2010 was $3.4 million, or $0.07 per share, down from $5.5 million, or $0.12 per share, in the first quarter of 2010. GAAP net income in the second quarter of 2009 was $1.3 million, or $0.03 per diluted share.

Non-GAAP loss from operations was $2.8 million in the second quarter of 2010, down from $5.8 million in the previous quarter. Non-GAAP operating income was $2.6 million in the second quarter of 2009. Non-GAAP net loss was $1.7 million or $0.04 per share in the second quarter of 2010, down from $3.8 million, or $0.08 per share in the previous quarter. Non-GAAP net income in the second quarter of 2009 was $2.9 million, or $0.06 per diluted share.

For the six months ended June 30, 2010, revenues were $37.4 million, compared with $45.5 million for the same period a year ago. GAAP loss from operations for the six month period was $13.6 million compared with a loss of $0.6 million in 2009. GAAP net loss was $8.9 million, or $0.20 per share, for the six months ended June 30, 2010, compared with net income of $0.4 million, or $0.01 per diluted share, in the same period a year ago.

Non-GAAP loss from operations was $8.6 million for the six months ended June 30, 2010, compared with income from operations of $3.9 million in 2009. Non-GAAP net loss was $5.5 million, or $0.12 per share, compared with non-GAAP net income of $3.5 million, or $0.08 per diluted share, in the same period a year ago.

The Company closed the quarter with $39.3 million in cash, cash equivalents, and marketable securities. Deferred revenue at June 30, 2010 was $21.8 million.

"We are pleased with the continuing ramp up of the sales of our branded solutions around the world", said ReiJane Huai, Chairman and Chief Executive Office of FalconStor. "We expect the recently established strategic partnerships with top-tier storage vendors to accelerate the sales of our data deduplication and replication solutions, and boost our brand recognition in the channel. Coupled with ongoing expense-control and operational discipline, we are expecting to continue to enhance our financial performance and to increase shareholder value."