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

AUSTIN, Texas--(BUSINESS WIRE)--

FalconStor Software, Inc. ( 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 ( FALC ). “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 ( FALC )

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 ( FALC ) are trademarks or registered trademarks of FalconStor Software, Inc. ( FALC ), 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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Source: FalconStor Software, Inc. ( FALC )