FalconStor: Fiscal 2Q25 Financial Results

Hybrid Cloud ARR Run-Rate and Cash Growth

• 57% increase in total hybrid cloud ARR run-rate vs. Q2 2024
• 77% increase in cloud-native ARR run-rate vs. Q2 2024
• 13% increase in cash vs. Q2 2024

 FalconStor Software, Inc. announced financial results for its second quarter of 2025, which ended on June 30, 2025.

“Our strategic shift to subscription and consumption-based recurring revenue models continued in Q2, with hybrid cloud ARR run-rate increasing 57% Y/Y,” said Todd Brooks, CEO, FalconStor Software. “This shift is foundational to building a resilient, durable business that aligns with the evolving needs of enterprise customers running mission-critical workloads across on-premises and hybrid cloud environments.“

“While total revenue declined Y/Y due to deal timing and the expanding role of monthly consumption contracts, the underlying momentum in our hybrid cloud business is encouraging. With strong IBM ecosystem alignment, expanding global partnerships, and accelerating customer adoption, we are confident in our long-term growth trajectory and FalconStor’s growing role in powering data resilience for the world’s most critical workloads.”

Second Quarter 2025 Financial Results

• Hybrid Cloud ARR Run-Rate: 57% increase trailing 12 months
• Ending Cash:  $2.9 million, compared to $2.5 million in the second quarter of fiscal year 2024
• Total Revenue: $2.1 million, compared to $2.4 million in the second quarter of fiscal year 2024
• Total Operating Expenses: $2.2 million, compared to $2.0 million in the second quarter of fiscal year 2024
• Non-GAAP EBITDA: $(0.5) million, compared to $0.1 million in the second quarter of fiscal year 2024
• GAAP Net Income (Loss): $(0.5) million, compared to $(0.03) million in the second quarter of fiscal year 2024

“While the quarter produced negative Y/Y revenue growth, we remain focused on long-term growth, innovation, and delivering excellent customer service. At the same time, we are taking a disciplined approach to managing expenses and improving operational efficiency to strengthen our financial foundation and support long-term, sustainable growth,” said Vincent Sita, CFO, FalconStor. 

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) depreciation, (ii) amortization, (iii) restructuring expenses, (iv) severance expenses, (v) board expenses, (vi) stock based compensation, (vii) non-operating expenses (income) including income taxes and interest & other expenses (income). For a reconciliation of our GAAP and non-GAAP financial results, please refer to our Reconciliation of Net Income (Loss) to Adjusted EBITDA presented in this release.