FalconStor Software, Inc.
Q1 2023 Earnings Call Transcript
Published:
- Clark Liddell:
- Good afternoon, and thank you for joining us to discuss FalconStor Software's Q1 2023 Earnings. Todd Brooks, FalconStor's Chief Executive Officer; and Vincent Sita, Chief Financial Officer will discuss the company's results and activities and we'll then open the call to your questions. The company would like to advise all participants that today's discussion may contain what some consider forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties are discussed in FalconStor's reports on Forms 10-K, 10-Q and other reports filed with the Securities and Exchange Commission and in the company's press release issued today. During today's call, there will be discussions that include non-GAAP results. A reconciliation of the non-GAAP results to GAAP has been posted on FalconStor's website at www.falconstor.com under Investor Relations. After the close of business today, FalconStor released its Q1 2023 earnings. Copies of the earnings release and supplemental financial information are available on FalconStor website at www.falconstor.com. I'm now pleased to turn the call over to Todd Brooks. Todd, I believe you're on mute.
- Todd Brooks:
- Thank you, Clark. I appreciate that. And thanks for everybody for joining our call today. I appreciate you taking your time. Q1 was obviously, a very important quarter for us, as we increased our annual recurring revenue, we added new hybrid cloud customers through our partnership with IBM. We expanded our MSP business and we improved legacy customer retention. We are a trusted data protection innovator and we enable the world's most demanding managed service providers and enterprises to modernize their disaster recovery and data backup operations for the hybrid cloud world, protecting data across on-premises data centers, public cloud and private cloud environments. Migration to the cloud, data center rationalization and increased leverage of outsourced managed services are top priorities for enterprise, CIOs and are fundamental macro shifts to which, FalconStor technology in our 20-plus years of market experience are well aligned. Our solutions deliver increased data security and provide for quick data recovery, including recovery from ransomware attacks. And our solutions accomplished these, while driving down long-term data storage footprints by up to 95%. Our hybrid cloud data protection solutions excel in four key areas
- Vincent Sita:
- Thanks Clark. So if we look at the income statement, we closed Q1 of this year with $2.3 million in revenues operating expenses of $2.3 million, net operating loss of $421,000 and a net loss of $448,000. So how did this compare to prior year Q1 of 2022? So revenues represent an increase of 11%. Operating expenses were 16% lower or $400,000 lower than the previous year Q1 2022. So, as a result net operating income was $0.7 million higher in 2023 versus 2022. Net income in Q1 2023 was a net loss of $448,000 versus a net loss of $1.1 million last year Q1, 2022. If we look at our -- the balance sheet on the next page, we ended the quarter with a cash balance of $1.8 million, compared to $2 million at December 31, 2022 compared to $3.4 million as at March 31, 2022, so therefore a decrease of $0.2 million from Q4 of 2022 and a decrease over Q1 2022 of $1.6 million. Looking at net working capital. So net working capital cash, which we exclude contract assets and deferred revenues, but include the redemption value of our term notes ended at $872,000, a decrease of $0.3 million from Q4 2022 and a decline of $0.9 million from Q1 2022. We closed the quarter with $1.8 million in accounts receivable -- accounts payable and accrued expenses of $1.7 million and deferred revenues of $5 million. So Todd, I'll turn it back to you, if you have any other final comments.
- Todd Brooks:
- Well, thanks Vince. I appreciate that. And clearly, we're encouraged by the progress that we're making with IBM and our every cloud focus. We've got a lot of work to do. We're going to clearly continue to work hard to manage our expenses make sure that we are profitable or very close to profitability every quarter. Clearly, we fell short of that a little bit in Q1. Although, we did dramatically improve our net income still was a loss for the quarter, so we've got a little bit of work to do there. But nonetheless, we're excited by the increase in hybrid cloud sales and just engagement in general with IBM and that partnership and the IBM partners. So with that, let me pause and Clark, you can open up the floor for questions.
- A - Clark Liddell:
- Todd Brooks:
- All right. Thanks, Clark. Once again thanks everybody for your time. I look forward to connecting again in the quarter and look forward to continue to work hard to grow this business with IBM and business in general with FalconStor. So, thanks again for taking your time and we'll talk next time.