Data Storage Corp Q4 FY2024 earnings call

• Financial performance in 2024: Total revenue grew 2%, Cloud Infrastructure and Disaster Recovery Service segment up 27% to $12.3 million (51% of total revenue), net income up 71%, adjusted EBITDA up. - International expansion: Launched CloudFirst Europe Limited in the UK, enabled deployment of 3 Tier 3 data centers, appointed Colin Freeman as Managing Director of CloudFirst Europe. - Merger: Merged Flagship and CloudFirst in January 2024, enhancing internal efficiency and go-to-market engine. - Client engagements: Secured deals in regulated sectors like motorsport, insurance, and healthcare with mission-critical solutions. - Platform expansion: Added a Tier 3 data center in Chicago, global infrastructure now has 10 data centers. - Market awareness: CloudFirst website had over 84,000 unique visitors in 2024, sales lead funnel built with thousands of organizations on the nurture list.

Total revenue for the 2024 fiscal year was $25.4 million, up 2% from $25 million in 2023. The Cloud Infrastructure and Disaster Recovery Service business segment had revenue climbing 27% year-over-year to $12.3 million, making up 51% of total revenue. There was a decline in onetime hardware and a slight decrease in managed service revenue, aligning with the strategy to prioritize recurring revenue streams. The annual recurring revenue run rate ended at $21.5 million. Net income improved to $513,000, up nearly 71% from 2023, and adjusted EBITDA reached $2.37 million, up from $1.64 million in 2023. Cash and marketable securities stood at $12.3 million with no debt.

• Expecting some CapEx spending, but not significant, with the UK expected to break even in January 2026. - CloudFirst has a strong organic growth trajectory with a compounded annual growth rate of 18% from Q1 2020 to Q1 2025, and 30% including the Flagship merger. - Confident in being free cash flow neutral or positive in 2025 without significant equipment sales, given the margin of CloudFirst's cloud services and managed services.

• Ability to benefit from the IBM cloud migration underway. - Ability to position itself for future profitability. - Ability to maintain its NASDAQ listing. These risks could cause actual results to differ materially from expectations.

Q: Adam Waldo asks about strategic and capital allocation, specifically on free cash flow and stock buybacks.

A: Charles Piluso says they're fine without equipment sales as CloudFirst has a 30% EBITDA margin on cloud services. Discussed Board level thoughts on stock buybacks, focusing on warrants and organic growth over share buybacks.