Falconstor Software, Inc. (FALC) research, news, and more from GeoInvesting

Company description

Tue, 22 Dec 2020 23:48:31 GMT

FalconStor Software, Inc. (OTCQB: FALC) is a modern enterprise-class data protection company that is mobilizing the past, energizing the present, and empowering the future of data storage and archival. The company provides software and cloud services to optimize long-term retention of historical data, enhance performance and scalability for present data retention, and allow the seamless adoption of future storage technologies. Customers leveraging FalconStor’s container technology have a competitive advantage facilitating the transition between storage systems and the cloud to reduce the complexity and management of the 100-year data retention lifecycle.

Research

Thu, 07 May 2026 17:36:34 GMT

Falconstor Software, Inc. (OTCID:FALC) ($2.35; $16.8M market cap) announced Q1 2026 results:

Q1 2026 sales of $4.3 million vs. $2.5 million in the prior year
Q1 2026 EPS: $0.12 vs. loss of $(0.06) in the prior year

Management Commentary:

“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 of 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 managed service providers (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.”

“In parallel with our revenue growth, we remain focused on optimizing our cost structure to drive operating leverage,” said Vincent Sita, FalconStor CFO. “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.”

Our Quick Take:

There was a noticeable acceleration in revenue: it was up 73% YoY and 30% sequentially, with product revenue more than doubling (+137% YoY). Most of the growth came from the Asia Pacific region, which jumped from $0.3M to $2.0M YoY, while the top two customers represented more than 54% of the quarter’s revenue. Customer concentration is a concern, but recurring revenue represented 87% of total billings, up from 67% in the prior-year period.

The EPS number is also impressive at $0.12, which annualizes to $0.48 and would put the company at a run-rate P/E of 5.0x. That said, Q1 product revenue benefited from upfront recognition of multi-year deals, so a clean run-rate is probably lower than $0.48.

What’s the catch? The company has 900,000 shares of Series A Preferred Stock outstanding, with a redemption value of $20.4 million. The preferred accrues cumulative dividends at 5% annually, or about $1 million per year, at a conversion price of $102.49. Since the stock trades around $2.35, conversion is effectively impossible, meaning the preferred functions more like a debt instrument. The rate also jumps from 5% to 10% if dividends are not paid on a timely quarterly basis.

It is worth flagging that both the preferred’s mandatory redemption date and the senior secured debt maturity were just extended to June 30, 2027, and both are held by Hale Capital. Hale has been extending the preferred since 2017, so another extension is very likely, since the company will almost certainly not be able to pay the $20.4 million in June 2027. This is especially true because Hale also controls 50.7% of the common shares.

FalconStor Software, Inc. provides hybrid cloud data protection and storage management software for enterprises needing backup, optimization, and centralized orchestration across physical, virtual, and cloud environments

Research

Thu, 05 Mar 2026 16:36:23 GMT

Falconstor Software, Inc. (OOTC:FALC) ($1.74; $12.4M market cap) announced Q4 and full-year 2025 results:

Q4 sales of $3.3 million vs. $2.8 million in the prior year
Q4 2025 EPS: $0.19 vs. loss of $0.04 in the prior year
Q4 2025 non-GAAP EPS of $0.07 vs loss of $0.04
FY 2025 sales of $10.4 million vs. $10.4 million during the full year of 2024
FY 2025 EPS: loss of $(0.05) vs. loss of $(0.16) during the full year of 2024

Management Commentary:

“Our fourth quarter results represent an important milestone in FalconStor’s multi-year transformation,” said Todd Brooks, CEO of FalconStor Software. “After several years of deliberately transitioning our business from perpetual license revenue to subscription and consumption-based recurring revenue, we are beginning to see the expected outcome, a return to total revenue growth while maintaining strong profitability.

“Hybrid Cloud ARR run-rate increased 61% year-over-year in the fourth quarter, continuing the momentum we have built and validating our strategy to align FalconStor with how enterprise customers now consume data protection and resilience solutions. Approximately 75% of FalconStor revenue is now recurring, providing greater visibility, stability, and long-term operating leverage for the business.

“While full year 2025 revenue remained consistent with 2024 as this transition completed, the return to quarterly revenue growth in Q4 marks a meaningful inflection point for FalconStor. Based on current customer demand and pipeline activity, we believe this momentum positions us well entering 2026.

“Today, FalconStor operates with a stronger recurring revenue foundation, expanding hybrid cloud adoption, and continued financial discipline, creating increasing long-term value for customers, partners, and shareholders.”

“We continue to execute with disciplined cost management and operational rigor, while strategically advancing our growth and innovation initiatives,” said Vincent Sita, FalconStor CFO.

Our Quick Take:

Q4 2025 seems to have been FALC’s inflection point, both revenue and EPS were up YoY, and according to management, this quarter marks a milestone in their transition from perpetual license revenue to subscription and consumption-based recurring revenue. Unfortunately, they don’t report this information every quarter; however, according to their December 9, 2025, press release, more than 75% of their revenue is now recurring.

Even though the quarter was good, we also want to highlight that FALC has 900,000 Series A Preferred Stock outstanding with a redemption value of $20.4 million. The preferred accrues cumulative dividends at 5% annually ( $1 million per year) and has a conversion price of $102.49. Since the stock trades around $1.67, conversion is effectively impossible, meaning the preferred functions as a debt instrument. Note: The rate increases from 5% to 10% if the company fails to pay dividends on a timely quarterly basis.

Research

Mon, 20 Mar 2023 11:19:32 GMT

Falconstor Software (OTC BB:FALC), a trusted data protection leader modernizing disaster recovery and backup for the hybrid cloud world, entered our radar as shares hit new highs. In our March 6, 2023 research note, we mentioned we wanted to track the stock as it heads into its Q4 2022 report to see if the company is nearing profitability and monitor the growth of its new recurring revenue business.

The company reported its Q4 2022 results on March 15, 2023:

Total sales were $2.5 million vs $3.7 million in the prior year
EPS of $0.00 vs loss of $0.03

While total revenue was down, the company’s hybrid cloud revenue run-rate increased 20% for Q4 versus the previous quarter and represented a 222% increase versus Q4 of 2021, as sales from its IBM relationship formally launched in the second half of 2022. The company does not break out the actual amount of the recurring revenue, which is likely a small percent of total revenue at the moment.

As the company makes the shift from legacy perpetual revenue to annual recurring revenue, we will need to see more segmented reporting before we dive in too much further.

Research

Mon, 06 Mar 2023 15:57:41 GMT

Falconstor Software (OTC BB:FALC) ($2.05; $14.5m market cap), a trusted data protection leader modernizing disaster recovery and backup for the hybrid cloud world is on our radar as shares hit new highs. We want to track as it heads into its Q4 2022 report to see if the company is nearing profitability and the growth of its new recurring revenue business.

The stock hit a new high last week, probably on the heels of investors connecting the company to artificial intelligence hype that’s going on around the market right now. Buried in a 10K, the company includes some verbiage about artificial intelligence and its business.

For a little more color on the story, below are CliffsNotes from MS Microcaps:

“CliffsNotes: FALC sells disaster recovery and backup cloud software solutions. Sales are not setting the world on fire and profits have been inconsistent. The main reason we want to track FALC is that the company is in the midst of transitioning to a recurring revenue software model. Now that recurring revenue makes up 70% of total revenue, we want to see if growth will begin to accelerate and if the company is in a position to report consistent profitability, a goal they are now talking about. Furthermore, management seems ready to start executing an acquisition strategy.

On the downside, it appears that the company is a software reseller, meaning it relies on third party software. What we want to find out is if the company adds any proprietary software/feature enhancements to third party software. This can ultimately impact valuation, in that pure re-sellers tend to trade at low valuation multiples.”

Research

Wed, 22 Nov 2017 19:07:50 GMT

Falconstor Software (OTC BB:FALC) ($0.28; $12.7m market cap), a application software company has entered our radar. Yesterday we issued the following tweet:

We will keep watching FALC due to its forecasted annual cost savings.