Data Storage Corp Q1 FY2025 earnings call

• Mission: To support enterprises and institutions with cloud infrastructure, disaster recovery, and business continuity solutions for mission-critical systems.
• Operating platform: CloudFirst Technologies, purpose-built for reliability, scalability, and security, especially for IBM Power Systems, serving industries like financial services, healthcare, etc.
• European expansion: Invested in the UK, established a Managing Director, solution architect, and partner manager; installed equipment in 3 UK data centers, have 10 partnerships/distributors, training sales reps of partners to take orders; expect revenue start in Q4 2025, breakeven in Jan 2026.
• Financials: Total revenue $8.1M, cost of sales $5.2M, SG&A $3M, adjusted EBITDA $497K, net income $24K, cash $11.1M at quarter end.

Revenue for the first quarter of 2025 was $8.1 million. The core Cloud Infrastructure and Disaster Recovery services grew 14% year-over-year. Gross profit was $2.86 million, maintaining margin stability. Adjusted EBITDA came in at $497,000. Cash and marketable securities stood at $11.1 million at the end of the quarter, and the company remained debt-free. Revenue was down approximately 2% compared to the first quarter of 2024, primarily due to a decrease in onetime equipment sales. Cost of sales decreased by approximately $45,000 or 1%, while selling, general and administrative expenses increased by approximately $200,000 or 2%. Adjusted EBITDA in the first quarter of 2025 was $497,000 compared to $680,000 in the first quarter of 2024. Net income attributable to common shareholders was $24,000 in the first quarter of 2025 compared to $357,000 in the first quarter of 2024.

• Anticipate European revenue to start in the fourth quarter of 2025.
• Expect annual recurring revenue to be a little over $22 million for the year.
• Anticipate January 2026 to be the first month to breakeven for European operations.

• Factors affecting results: Ability to benefit from IBM cloud migration, position for future profitability, maintain NASDAQ listing.

Q: Where are we on European expansion business development?

A: Started investing in UK in Oct, have Managing Director, solution architect, partner manager; installed equipment in 3 UK data centers in Jan; 10 partnerships/distributors; training sales reps of partners, expecting revenue start in Q4 2025, breakeven in Jan 2026.

Q: When to file Form 10-Q? ARR comparison? Remaining customer contract value? Strategic alternatives? Guidance?

A: Form 10-Q filed today. Annual recurring revenue for the quarter was about $6.7 million, new estimate for annual recurring revenue is a little over $22 million. Total contract value of existing contracts is in excess of $41 million with over 95% having auto renewal. Considering strategic alternatives, including various options like buybacks, PE firm sales, etc., and been encouraged to provide guidance but advised against it currently.