FalconStor Hybrid Cloud Business Skyrockets with 57% ARR Growth, Signaling Successful Strategic Shift

MELVILLE, N.Y. – FalconStor Software, a trusted leader in data protection for the hybrid cloud, today announced impressive growth in its core business, highlighted by a 57% year-over-year increase in its hybrid cloud Annual Recurring Revenue (ARR) run-rate for the second quarter ending June 30, 2025.

The significant jump in ARR underscores the success of the company’s strategic pivot towards subscription and consumption-based revenue models, a move designed to meet the evolving demands of modern enterprises.

“Our strategic shift to subscription and consumption-based recurring revenue models continued in Q2, with hybrid cloud ARR run-rate increasing 57% year-over-year,” said Todd Brooks, CEO of FalconStor Software. “This shift is foundational to building a resilient, durable business that aligns with the evolving needs of enterprise customers running mission-critical workloads across on-premises and hybrid cloud environments.”

While total revenue for the quarter was $2.1 million compared to $2.4 million in the prior year, the company attributes this to expected fluctuations from deal timing and the successful transition to monthly consumption contracts. Brooks emphasized that the underlying business momentum remains strong.

“The underlying momentum in our hybrid cloud business is encouraging,” Brooks continued. “With strong IBM ecosystem alignment, expanding global partnerships, and accelerating customer adoption, we are confident in our long-term growth trajectory and FalconStor’s growing role in powering data resilience for the world’s most critical workloads.”

Key Financial Highlights for Q2 2025:

• Hybrid Cloud ARR Run-Rate: Increased by a robust 57% over the trailing twelve months.

• Ending Cash: Strengthened to $2.9 million, an increase from $2.5 million in the same quarter last year, indicating solid cash management.

• Total Revenue: Reported at $2.1 million.

• GAAP Net Loss: $(0.5) million.

Despite the short-term impact on total revenue and net income, FalconStor’s leadership remains focused on its long-term vision. The company is actively managing its financial foundation to fuel sustainable growth.

“While the quarter produced negative year-over-year revenue growth, we remain focused on long-term growth, innovation, and delivering excellent customer service,” said Vincent Sita, FalconStor CFO. “At the same time, we are taking a disciplined approach to managing expenses and improving operational efficiency to strengthen our financial foundation and support long-term, sustainable growth.”

The company’s performance this quarter demonstrates a clear focus on building a future-proof business model centered on recurring revenue, positioning FalconStor for continued success in the dynamic data protection market.

About Non-GAAP Financial Measures

This article includes references to non-GAAP financial measures, such as Non-GAAP EBITDA. These measures are used by FalconStor’s management to supplement their understanding of the company’s operating performance and are not prepared in accordance with generally accepted accounting principles (GAAP). They should be considered a supplement to, and not a substitute for, their comparable GAAP measures. For a full reconciliation of GAAP and non-GAAP financial results, please refer to the company’s official press release.