FalconStor Software: Fiscal 1Q26 Financial Results

FalconStor Software, Inc., a trusted data protection player modernizing data protection and intelligence for the hybrid cloud world, announced financial results for its first quarter of 2026, which ended on March 31, 2026.“FalconStor delivered a strong start to 2026, with first quarter total revenue increasing 73% year-over-year and meaningful improvements across EBITDA and net income,” said Todd Brooks, CEO, FalconStor Software. “These results reflect continued progress in executing our strategy to build a more recurring, scalable business model.

A key driver of our performance is the increasing adoption of our solutions by MSPs. We are seeing a growing number of IBM-centric MSPs standardizing on StorSafe-MSP as a core platform for hybrid cloud data protection and archive services. At the same time, our reach continues to expand across enterprise customers through StorSafe-Enterprise and our Habanero offering, extending our presence across both on-premises and cloud environments.

Our hybrid cloud annual recurring revenue (ARR) run-rate increased 89% year-over-year, and ARR represented 87% of total billings in the quarter, up from 67% in the prior year period. This shift toward recurring revenue is strengthening the predictability and durability of our business.

As our business continues to shift toward multi-year MSP engagements and recurring revenue models, the timing and structure of customer agreements can influence how revenue is recognized in any given period. We believe Hybrid Cloud ARR run-rate and total billings are the most representative measures of our underlying business momentum. On those measures, we are also encouraged by the continued expansion of our pipeline and growing adoption of our solutions across both enterprise and MSP channels.

We remain focused on executing against our strategy, growing our recurring revenue base and delivering long-term value for our customers and shareholders.”

First Quarter 2026 Financial Results

• Hybrid Cloud ARR Run-Rate: 89% increase trailing twelve months
• Ending Cash: $2.4 million, compared to $3.3 million in the first quarter of fiscal year 2025
• Total Revenue: $4.3 million, compared to $2.5 million in the first quarter of fiscal year 2025
• Total Operating Expenses: $2.6 million, compared to $2.1 million in the first quarter of fiscal year 2025
• Non-GAAP EBITDA: $1.4 million, compared to $0.1 million in the first quarter of fiscal year 2025
• GAAP Net Income: $1.1 million, compared to $0.1 million in the first quarter of fiscal year 2025

“In parallel with our revenue growth, we remain focused on optimizing our cost structure to drive operating leverage”, said Vincent Sita, CFO, FalconStor. “Over the past several years, we have streamlined operations, including rationalizing certain foreign subsidiaries and aligning resources with our highest-priority growth initiatives. We continue to identify additional efficiency opportunities while maintaining our ability to scale.”