FalconStor Software, Inc. (OTCMarkets.com: FALC), a trusted data protection leader modernizing data protection and intelligence for the hybrid cloud world, today 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 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.”
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, 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.”
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.
Please click this link for accompanying financial charts.
About FalconStor Software
FalconStor is the trusted data protection software leader modernizing disaster recovery and backup operations for the hybrid cloud world. The Company enables enterprise customers and managed service providers to secure, migrate, and protect their data while reducing data storage and long-term retention costs by 60% or more, even when necessary additional infrastructure costs are included. More than 1,000 organizations and managed service providers worldwide standardize on FalconStor as the foundation for their cloud first data protection future. Our products are offered through and supported by a worldwide network of leading managed service providers, system integrators, resellers, and original equipment manufacturers.
FalconStor and FalconStor Software are trademarks or registered trademarks of FalconStor Software, Inc., in the U.S. and other countries. All other company and product names contained herein may be trademarks of their respective holders.
Links to websites or pages controlled by parties other than FalconStor are provided for the reader’s convenience and information only. FalconStor does not incorporate into this release the information found at those links nor does FalconStor represent or warrant that any information found at those links is complete or accurate. Use of information obtained by following these links is at the reader’s own risk.
CONTACT US AROUND THE GLOBE
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Corporate Headquarters |
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Europe Headquarters |
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111 Congress Avenue |
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GERMANY |
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Suite 500 |
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Landsberger Straße 302 |
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Austin, Texas 78701 |
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80687 München, Germany |
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Tel: +1.631.777.5188 |
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