Data Storage Corp Q4 FY2023 earnings call

• In 2023, revenue was $25 million, gross profit increased 18.5% with gross profit margin at 38.4% from 33.9% in 2022.
• CloudFirst had net income of ~$2.6M and adjusted EBITDA of $3.8M in 2023. Flagship had revenue of $10.4M, net income of ~$28,000, and adjusted EBITDA over $400,000 in 2023, improving from 2022 loss.
• CloudFirst and Flagship have merged internally, which is expected to improve gross profit margins and increase revenue and profitability.
• Growth strategies include merging CloudFirst and Flagship, expanding distribution channels, enhancing digital and direct marketing, refining lead generation, organizing revenue - centric sales events, investigating strategic M&A prospects, and venturing into international markets. Currently, an initiative to engage managed service providers in the U.K. is in process.
• Website visitors in 2023 were over 135,000, and nurture list has over 25,000 organizations interested in services.
• Initiated strategic sales and marketing campaign in fourth quarter, recruited new sales representatives, introduced major account program. Secured multiple multimillion - dollar contracts with various companies like Forbes Global 2000 listed company, prominent global provider of end - to - end business processes, leading promotional company, leading sports and entertainment company, large food distributor in U.S., global telecommunications company, and leading U.S. insurance company.
• Remaining contract value today is $26.7 million, new monthly billing over $100,000 with total contract value of $3.5 million, and over 60 proposals outstanding with total contract value of over $8 million.

In 2023 fiscal year, Data Storage Corporation had record revenue of approximately $25 million. CloudFirst as a standalone business achieved $13.5 million in revenue with a net income of approximately $2.6 million and $3.8 million in adjusted EBITDA, EBITDA margin 28%. Flagship as a standalone business in 2023 achieved $10.4 million in revenue with a net income of approximately $28,000 and over $400,000 in adjusted EBITDA, a swing from the previous year's loss of $1.3 million. CloudFirst contributed 54% to total revenue ($13.5M / $25M), and Flagship contributed 41.6% ($10.4M / $25M).

• Anticipate continued improvement in margins and overall profitability in 2024 and beyond by executing growth strategies including the CloudFirst and Flagship merger, expanding distribution channels, etc.
• Aim to further boost revenue and optimize long - term profitability through various growth initiatives.
• Intend to continue with international market expansion efforts, with progress in engaging managed service providers in the U.K. and aiming for contracts in 2024.
• Noted strong start in 2024 with expanding contract with global telecommunications company and contract with leading U.S. insurance company for cloud migration.

• Ability to benefit from the IBM cloud migration underway.
• Ability to position itself for future profitability.
• Ability to maintain its NASDAQ listing.

Q: What was the annual recurring revenue entering 2023?

A: Chuck Piluso mentioned he believes the number for 2023 was $18.7 million, but didn't have the 2022 number immediately and said he could get it for Matthew Galinko.

Q: Any specific programs to drive receivables number lower and what to expect going forward?

A: Chris Panagiotakos said they have improved collections, start making collection calls at around 30 - day mark which has improved collection efforts.

Q: How is the international opportunity initiative progressing?

A: Hal Schwartz said it's about setting up a foundation in U.K. with an organization, anticipating substantial contracts in U.K. by end of 2024, first focusing on distribution network, and Charles Piluso added they started reaching out to MSPs in U.K. six months ago, spending time talking to different folks, and aiming to lock up distribution over next three months through summer.

Q: When was the cross - sell team assembled for mid and large enterprise clients, how long have they been operating, and what's being seen so far?

A: Charles Piluso said cross - selling started in November 2022, with ongoing training. Hal Schwartz added they view leveraging relationships with account base to gain more IT spend in current account base as low - hanging fruit. Charles Piluso also mentioned a very large sale was taken by a sales person from Flagship now part of CloudFirst.