FalconStor Software Announces Third Quarter of 2025 Results
MWN-AI** Summary
FalconStor Software, Inc. (OTCMarkets: FALC) announced its financial results for the third quarter of 2025, which concluded on September 30, 2025. The company reported a substantial growth in its Annual Recurring Revenue (ARR) run-rate across several deployment models. The total hybrid cloud ARR run-rate increased by 54% year-over-year, while the on-premises ARR run-rate grew by 62%, and cloud-native ARR run-rate surged by 92%. These results underscore the success of FalconStor's strategic shift towards subscription and consumption-based models as highlighted by CEO Todd Brooks.
Despite the encouraging ARR growth, FalconStor's total revenue for Q3 2025 was $2.5 million, a decrease from $2.9 million in the same period of 2024. The decline was attributed to shifts in revenue recognition due to the increasing role of monthly consumption contracts. The company's operating expenses also rose to $2.1 million compared to $1.9 million the previous year.
FalconStor continues to maintain a solid customer base, with over 900 active IBM Power customers across more than 27 countries, protecting over 3,700 petabytes of data. CFO Vincent Sita emphasized the firm's commitment to long-term strategic objectives, focusing on innovation and customer success while managing expenses for sustainable growth.
The financial results included a non-GAAP EBITDA of $0.1 million and a GAAP net income of $0.03 million, both reflecting a decline compared to the prior year. The company's ending cash balance stood at $1.9 million. With strong momentum in its recurring revenue model, FalconStor remains optimistic about future revenue growth, signaling a robust positioning in the hybrid cloud data protection space.
MWN-AI** Analysis
FalconStor Software (OTC: FALC) has reported its third-quarter results for 2025, reflecting a significant transformation within its business model amid a competitive landscape in data protection solutions. While total revenue declined to $2.5 million from $2.9 million year-over-year, the robust growth in Annual Recurring Revenue (ARR) across various segments is noteworthy, indicating a shift toward a more sustainable revenue stream.
The hybrid cloud ARR run-rate surged by 54%, and cloud-native ARR saw an astounding 92% increase compared to the previous year. Such growth illustrates a positive trend as FalconStor aligns itself with enterprise demands for hybrid and cloud-focused solutions. The strategic pivot to subscription-based services underscores the company's commitment to adapting to market trends.
Investors should take note of FalconStor's focus on enhancing operational efficiency, despite the marginal decline in total revenue. With cash reserves at $1.9 million, down from $2.8 million the previous year, cash management will be critical as the company balances growth investments with financial sustainability. The company's ability to maintain a positive non-GAAP EBITDA of $0.1 million, though lower than the previous year, signals operational resilience.
Furthermore, the stable customer base of over 900 clients across more than 27 countries highlights FalconStor's credibility in securing essential data for large enterprises, particularly in the IBM ecosystem. This diversification across geographical borders could provide competitive leverage in capturing market share.
In conclusion, while the revenue dip warrants caution, the phenomenal growth in ARR suggests FalconStor is well-positioned for future success. Investors should monitor the execution of its strategic initiatives and operational improvements closely. A potential turnaround could drive stock value higher as recurring revenue increases its proportion within total earnings. Investors might find this an opportune time to accumulate shares, given the long-term growth trajectory.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
Hybrid Cloud ARR Run-Rate Growth
- 54% increase in total hybrid cloud ARR run-rate vs. Q3 2024
- 62% increase in on-premises ARR run-rate vs. Q3 2024
- 92% increase in cloud-native ARR run-rate vs. Q3 2024
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 third quarter of 2025, which ended on September 30, 2025.
“Our strategic shift to subscription and consumption-based recurring revenue models continued in the third quarter, and we are now seeing meaningful ARR growth across all deployment models where IBM Power customers run their mission-critical workloads,” said Todd Brooks, CEO of FalconStor Software. “Total hybrid cloud ARR run-rate increased 54% year-over-year, on-premises ARR run-rate grew 62%, and cloud-native ARR run-rate increased 92%. This reinforces that modernization is not a single-direction journey. IBM Power customers are modernizing on-premises, moving to cloud where it makes sense, and increasingly operating in hybrid models. Our solutions are uniquely positioned to support this full spectrum.”
“Today, we have more than 900 active IBM Power customers across 27+ countries, protecting 3,700+ petabytes of vital data, and we continue to deepen alignment across the IBM ecosystem to expand that reach. While total revenue declined year-over-year due to timing and the expanding role of monthly consumption contracts, the underlying momentum in our recurring business continues to be encouraging, and we see increasingly clear visibility toward consistent total revenue growth as ARR becomes a larger portion of our revenue mix.”
Third Quarter 2025 Financial Results
- Hybrid Cloud ARR Run-Rate: 54% increase trailing twelve months
- Ending Cash : $1.9 million, compared to $2.8 million in the third quarter of fiscal year 2024
- Total Revenue: $2.5 million, compared to $2.9 million in the third quarter of fiscal year 2024
- Total Operating Expenses: $2.1 million, compared to $1.9 million in the third quarter of fiscal year 2024
- Non-GAAP EBITDA: $0.1 million, compared to $0.7 million in the third quarter of fiscal year 2024
- GAAP Net Income (Loss): $0.03 million, compared to $0.68 million in the third quarter of fiscal year 2024
“While year-over-year results reflect softer revenue performance, we continue to execute on our long-term strategy, investing in innovation and customer success,” said Vincent Sita, FalconStor CFO. “At the same time, we remain disciplined in managing expenses and improving operational efficiency to position the company for sustainable, profitable growth.”
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 up to 95%. 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20251106553215/en/
CONTACT INFORMATION
For more information, contact:
Vincent Sita
Chief Financial Officer
FalconStor Software Inc.
investorrelations@falconstor.com
CONTACT US AROUND THE GLOBE
Corporate Headquarters
111 Congress Avenue
Suite 500
Austin, Texas 78701
Tel: +1.631.777.5188
salesinfo@falconstor.com
Europe Headquarters
GERMANY
Landsberger Straße 302
80687 München, Germany
salesemea@falconstor.com
FAQ**
How does FalconStor Software Inc. (OTCMarkets.com: FALC) plan to address the decline in total revenue while continuing to achieve significant increases in hybrid cloud ARR run-rate, especially with challenges observed in Q3 2025?
With a 9increase in cloud-native ARR run-rate, what specific strategies is FalconStor Software Inc. (FALC) employing to capture growth in this segment and enhance its competitive position in the market?
Given the decline in ending cash from $2.8 million to $1.9 million in Q3 2025, what measures is FalconStor Software Inc. (FALC) taking to improve cash flow and ensure sustainable growth moving forward?
How does FalconStor Software Inc. (OTCMarkets.com: FALC) plan to maintain its momentum in ARR growth while managing operating expenses that have also risen this quarter compared to the previous fiscal year?
**MWN-AI FAQ is based on asking OpenAI questions about Falconstor Software Inc (OTC: FALC).
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