FalconStor Software Announces Third Quarter of 2026 Results

Double-digit Revenue Growth and Product Line Expansion

• 30% increase in Total Revenue year-over-year
• 79% increase in Hybrid Cloud ARR Run-Rate year-over-year
• Launched new Habanero and Cloud Clean Room partnership with Fortra

AUSTIN, Texas--(BUSINESS WIRE)--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 2026, which ended on September 30, 2026.

“FalconStor delivered another strong quarter, with total revenue up 30% year-over-year, our fourth consecutive quarter of double-digit growth,” said Todd Brooks, CEO of FalconStor Software. “Our Hybrid Cloud ARR run-rate grew 79% year-over-year and continues to outpace any decline in our legacy product line.

Just as important, our growth is reaching the bottom line. Revenue grew $744,000 year-over-year while operating expenses grew $206,000, taking operating income from breakeven to $439,000 and net income from $30,245 to $381,926. For the first nine months of 2026, net income was $1.18 million, compared to a net loss of $435,890 in the same period last year.

Shortly after the quarter closed, Power by Fortra launched Continuity Care, built on FalconStor Habanero and Cloud Clean Room. Most IBM Power organizations can show that their backups ran. Far fewer can prove they can recover. Continuity Care delivers that proof, with immutable offsite copies, quarterly recovery tests in an isolated clean room on IBM PowerVS, and audit-ready documentation for regulators and cyber insurers, all managed by Fortra’s team.

Banks, insurers, manufacturers, and retailers run their most mission-critical systems on IBM Power because it is built for workloads that cannot go down. Continuity Care lets them harden the cyber resilience of those systems without having to procure dedicated recovery hardware at a time when AI infrastructure demand has made servers and storage scarce and expensive. Delivered through Fortra’s more than 7,000 direct IBM Power relationships, it gives FalconStor a meaningful new route to market.

We remain focused on converting this momentum into sustained, profitable growth for our customers, partners, and shareholders.”

Third Quarter 2026 Financial Results

• Hybrid Cloud ARR Run-Rate: 79% increase trailing twelve months
• Ending Cash: $2.0 million, compared to $1.9 million in the third quarter of fiscal year 2025
• Total Revenue: $3.3 million, compared to $2.5 million in the third quarter of fiscal year 2025
• Total Operating Expenses: $2.3 million, compared to $2.1 million in the third quarter of fiscal year 2025
• Non-GAAP EBITDA: $0.5 million, compared to $0.1 million in the third quarter of fiscal year 2025
• GAAP Net Income: $0.4 million, compared to $0.03 million in the third quarter of fiscal year 2025

   

“Our third quarter results reflect continued progress in driving profitable growth,” said Vincent Sita, CFO of FalconStor Software. “We remain focused on maintaining financial discipline and supporting our long-term strategic objectives.”

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.

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