FalconStor Is a Growth Company. Here’s How We Got There. 

We released our Q1 2026 results on May 6th, and for me personally, they represent much more than a good quarter. They represent the outcome of a long, deliberate journey to rebuild this company into something fundamentally different. That’s worth reflecting on. 

When I joined FalconStor in 2017, the company had genuinely great technology and a loyal customer base. It also had too many offices, too much overhead, a product portfolio that had spread itself thin, and a revenue model built almost entirely on perpetual license sales — unpredictable by nature, dependent on closing the next deal rather than compounding the last one. Before we could grow, we needed to rebuild. 

The first three years were about exactly that. We closed offices, cut overhead, focused the product roadmap, and rebuilt the cost structure. Unglamorous work, but necessary. 

By late 2021, we were ready to make a different kind of decision. 

Betting on IBM Power 

We looked at where the market was heading, where our technology had real differentiation, and where enterprise customers had genuine unmet needs. The answer was clear: IBM Power. 

IBM Power systems run some of the most mission-critical workloads in the world — banking, insurance, healthcare, government. These environments are operationally mature and deeply trusted, but many organizations were still relying on aging approaches to data protection and had no clear path to the cloud. We saw an opportunity to be the company that solved that problem. 

We went all in. We focused our development, our sales motion, our partner strategy, and our marketing entirely on the IBM Power market. In May 2022, we formalized a strategic relationship with IBM to deliver jointly-validated solutions for IBM Power Systems — covering cloud-native backup, hybrid cloud backup, and cloud migration for IBM Power environments. That relationship has deepened every year since. 

The IBM ecosystem rewards focus and depth. You either know this world or you don’t, and we know it better than almost anyone. Today, FalconStor protects more than 900 IBM Power customers across 27+ countries, with over 3,700 petabytes of IBM i data under protection. We operate across 25+ industries. That footprint didn’t happen by accident. 

Building the Partner Ecosystem 

Technology alone doesn’t drive growth at enterprise scale. Partners do. We’ve invested heavily in building and deepening relationships across the IBM partner ecosystem — IBM Business Partners, MSPs, system integrators, and global technology services companies. 

One relationship worth calling out specifically is Kyndryl. Collaborating with the world’s largest IT infrastructure services provider to bring StorSafe to IBM Power environments in Microsoft Azure is the kind of partnership that signals where the market is going and validates our position within it. It’s not the only one, but it’s illustrative of the caliber of relationships we’ve built. 

Our active partner ecosystem grew 15% year over year in 2025. Partners are the lifeblood of this business — they carry our solutions to market, they build services around them, and they bring us into accounts we could never reach alone. 

The Product Story: From StorSafe to Habanero 

Our product strategy has been deliberate. StorSafe gave us a strong foundation — a purpose-built, IBM-certified backup modernization platform that integrates natively with IBM Power environments without disrupting existing workflows. It has earned the trust of hundreds of enterprises and MSPs globally. 

But we knew we needed to go further. IBM Power customers increasingly need modern, cloud-ready offsite data protection — not as a new IT project, but as a managed service they can adopt without overhauling how they operate. That insight led to the development of Habanero. 

In January 2026, we launched FalconStor Habanero — a fully managed SaaS offering built on FalconStor’s patented technology and IBM Cloud infrastructure, including IBM Cloud Object Storage. Habanero delivers secure offsite retention, disaster recovery, and long-term archive for IBM Power environments with simple, predictable pricing and no new infrastructure for customers to deploy or manage. It’s now available globally through the IBM Cloud Catalog. 

Habanero is not just a new product. It’s the clearest expression yet of the kind of company FalconStor is becoming — one built on recurring, consumption-based revenue rather than one-time license sales. 

We’ve also been investing in AI. Thomas, our AI-powered technical advisor built specifically for IBM Business Partners, is one example of how we’re using emerging technology to help partners go deeper and move faster in the IBM ecosystem. There’s more coming in this space. 

The Financial Transformation 

The shift to recurring revenue is the most important structural change we’ve made, and it’s the one that’s hardest to see until it’s already working. 

For years, we were deliberately transitioning away from perpetual license revenue toward subscription and consumption-based models. That transition compresses reported revenue in the short term as you trade one-time payments for recurring streams. It requires patience and conviction. But when it works, it builds a fundamentally more durable and valuable business. 

It’s working. In the first quarter of 2026, total revenue grew 73% year over year, with hybrid cloud ARR run-rate up 89% compared to the same period in 2025. ARR now represents 87% of total billings, up from 67% a year ago. GAAP net income reached $1.1 million for the quarter. These are not incremental improvements — they reflect the outcome of a multi-year transformation reaching an inflection point. 

Approximately 75% of FalconStor’s revenue is now recurring. For investors and partners, that means greater predictability, greater visibility, and a business model that compounds rather than resets each quarter. 

What This Means Going Forward 

FalconStor is a focused company. We know our market, we know our customers, and we know what we’re building. The IBM Power data protection and cyber resilience market is large, underserved by modern solutions, and increasingly urgent as ransomware, compliance requirements, and hybrid cloud adoption all accelerate simultaneously. 

We have the technology. We have the partnerships. We have the customer base. And we now have the financial model to support sustained growth. Our roadmap includes new solutions to address some of the most pressing data protection and cyber resilience challenges facing IBM Power customers today — areas where we see significant unmet need and where FalconStor is well positioned to lead. 

The work of the last several years was about building a foundation worth standing on. We’re standing on it now.