Data Storage Corp Q3 FY2024 earnings call

• Penetrated high growth, highly regulated sectors like insurance, healthcare, and education. Expanded partnerships with a $1 billion insurance firm, a leading medical center, and a music publishing organization.
• Expanded infrastructure to Chicago and the U.K., with Colin Freeman appointed as Managing Director of CloudFirst Europe. CloudFirst website had over 65,000 visitors in the nine-month period, and the addressable market in Europe exceeds 50,000 companies.
• Achieved profitability in the third quarter of 2024, with improvements in infrastructure and cloud-based solutions on the enterprise platform.

For the third quarter of 2024, Data Storage Corporation generated $5.8 million in revenue, a 3% decline from the previous year. However, the gross profit margin was 43.2% in Q3 2024, up from 38.9% in the same period last year. For the nine-month period ending September 30, 2024, revenue totaled $19 million. The CloudFirst subsidiary contributed $5.5 million in revenue for the third quarter. Recurring subscription revenue is a strategic focus, and there was an increase in baseline revenue for 2025 in monthly subscription billing.

• Projected recurring revenue for CloudFirst in 2025 is over $20 million. Focus on recurring subscription revenue rather than one-time sales. Baseline revenue for 2025 in monthly subscription billing has increased, with a focus on building a stable revenue foundation through ongoing service contracts.

• Factors such as the ability to benefit from the IBM Cloud Migration, positioning for future profitability, and maintaining NASDAQ listing could materially affect actual results differing from expectations.

Q: How should we view the $20 million projected recurring revenue for 2025 and renewal rates?

A: The $20 million projection includes managed services and software/hardware renewals. Renewal rates are strong, around 92-94%, with clients often adding more services, and the business is sticky due to few competitors and clients being reluctant to migrate data.