FalconStor, a company that SiliconANGLE has been covering since VMworld 2011, announced their earnings.

FalconStor reported Q1 FY11 results after the close yesterday. Amidst substantial restructuring of North American sales team and decline of OEM revenues (-37% y/y), the company was able to grow non-OEM revenue +31% y/y in Q1 2011. Going forward non-OEM revenue will be the key metric to measure management against. If they can execute against the product roadmap, channel investments and new sales management hires then it should show up in channel revenue growth. The OEM relationships (e.g. HDS, HP) are also important but the real opportunity lies in doubling down on the channel.

The new CEO Jim McNiel has brought a new energy to this team and is aggressively investing in getting this company back on the right track. The company has grown sales headcount by 91% since the outset of the year and is now close to a full bench. They have also recently hired two sales executives away from Symantec, and have a new VP of Worldwide sales set to be announced shortly.

FalconStor has always been a product centric culture that, under new leadership, is finally investing is messaging, sales and the channel. With the sales restocking expected to be completed soon, this should mean they will hit their productivity stride around the time of the BlueStone (“service oriented data protection”) product release at year end. It is all about execution from here but it appears as though McNeil has this ship moving in the right direction.

Other Key Q1 Highlights

• New Direction…Very concise new direction = want to make brand synonymous with highest quality data protection solution
• Non-OEM Channels…Very good non-OEM growth +31% y/y, good growth amidst rebuilding NA channel team
• OEM Decline…OEM revs -37% y/y, down due to revs decline from EMC and Oracle, only 5% of total revs vs 16% y/y. Only 13% of product revs in Q1 from OEMs.
• New Release in Q2…Products undergoing improvement over last 6 mos, focused on “RUM” = reliability, usability, manageability, out by end of Q2
• BlueStone…Release coming at the end of this year. Single pane of glass using global policy to control and manage all back end policy. Web based interface to control all solutions, can do so on service basis versus file/block. Product is designed for enterprise and cloud providers.
• Sales Re-stocking…New VP sales recruited from Symantec, rebuilding NA sales team. Has brought in 19 new heads, up to 44 total now from 23 at beginning of year. Have recently recruited VP of sales ops from Symantec and new VP WW Sales being announced in next few weeks

FalconStor Software is a provider of disk-based data protection. FalconStor delivers data protection solutions that facilitate the availability of business-critical data. Their products are built upon the IPStor virtualization platform, include the virtual tape library (VTL) with data deduplication for backup optimization, continuous data protector (CDP), network storage server (NSS) for storage virtualization and provisioning, and the File interface deduplication system (FDS) for capacity optimized storage solutions.

Here is a video that we had with the CEO Jim McNiel.  For more videos on the backup sector we have some on SiliconANGLE.tv