FalconStor Software

FALC

Software - Application · Technology

Price

$1.62

-0.06 (-3.57%)

Market Cap

$11.6M

Exchange

Other OTC

Winston Score

Winston is curious

A decent business — some strong pillars, some weaker.

Data as of Aug 9, 2026 · filings through Mar 31, 2026

Share count rising — dilution

+9.7% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 6.5M (2021) → 7.1M (2025)

FalconStor Software makes data protection and storage software for businesses. Its main products help companies back up, recover, and manage large amounts of data stored on computer systems. The core customers are enterprises, government agencies, and managed service providers that need reliable ways to protect critical data without losing it.

FalconStor earns money through software licenses, maintenance contracts, and subscription-based support agreements, which create recurring revenue. The company operates primarily in North America and Europe and is quite small, with a market cap under $100 million. Its high gross margin of roughly 85% reflects the low cost of delivering software, and its established customer relationships in legacy storage environments provide some stickiness. The main risk is that larger competitors like Veeam, Commvault, and Veritas dominate the data protection market, making it difficult for FalconStor to win new customers and grow beyond its existing installed base.

Winston Score History

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+73.2% YoY

YoY Growth Rate

Revenue accelerating

EPS Growth

+308.3% YoY

YoY Growth Rate

EPS growth accelerating

R&D Spend

$3M/ year

↑ Rising (+21% vs prior year)

27.7% of revenue

1.8x the sector average (15%)

Investing heavily in future products and technology

Insider Activity

84.2%ownership

Insiders own a meaningful stake in the company

Cash Position

Cash flow positive

$6M cash & investments

Quarterly Free Cash Flow

→ Burn rate stable

Company generates more cash than it spends — no dilution risk from fundraising

Revenue accelerating

FalconStor Software grew revenue 73% year-over-year and the growth rate is speeding up. That's the kind of momentum growth investors look for — the question is whether margins can follow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Gross Margin

89.1%

Premium pricing power — 89.1% gross margin

Operating Margin

29.4%

Excellent — 29.4% operating margin

ROCE

26.6%

Exceptional — 26.6% return on capital

ROIC above 25%. Every dollar invested in the business earns more than 25 cents back per year.

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Growth

Sales YoY

+14.8%

Fast-growing sales (+14.8% YoY)

EPS YoY

N/A

Data not available

EPS Consistency

2/8 quarters

Earnings rarely grow — volatile business

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Cash Flow

Cash Conversion

-19%

Weak — only -19% of profit becomes cash

FCF Margin

-3.8%

Burning cash (-3.8%)

Free cash flow is negative. They are burning cash, not generating it.

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Stability

Debt / Equity

0.90

Moderate — manageable debt (0.90)

Interest Cover

19.00x

Comfortably covers interest (19.0x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

12.5x

Attractive valuation — P/E 12.5

P/E in the normal range. Price is roughly $15 for every $1 of yearly profit.

P/E vs Forward

N/A

not available

Data not available

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Dividends

Not applicable for this business.

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