Data Storage Corporation ((DTST)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Data Storage Corporation was marked by a positive sentiment, primarily driven by a strategic shift following the successful sale of its CloudFirst subsidiary. This move has bolstered the company’s financial standing, paving the way for future growth opportunities. However, the increase in SG&A expenses and the uncertainty surrounding the final cash position due to the tender offer and share buyback process pose notable challenges.
Sale of CloudFirst Subsidiary
The sale of the CloudFirst business was a significant highlight, completed for $40 million. This transaction has not only provided a robust financial foundation but also simplified the company’s structure, allowing it to focus on its core operations and strategic growth areas.
Increase in Sales from Continuing Operations
Sales from continuing operations saw a notable increase of $92,000, or 28.2%, reaching $417,000 for the three months ended September 30, 2025. This growth was primarily driven by an expanded customer base in voice and data telecommunication solutions, showcasing the company’s ability to enhance its market presence.
Significant Increase in Net Income
Net income attributable to common shareholders experienced a dramatic rise, reaching $16.8 million for the three months ended September 30, 2025, compared to $122,000 in the same period of 2024. This substantial increase was mainly due to gains from discontinued operations, reflecting the financial benefits of the strategic divestment.
Strong Cash Position
The company ended the quarter with a strong cash position, holding approximately $45.8 million in cash, cash equivalents, and marketable securities. This is a significant improvement from the $12.3 million reported at the end of 2024, indicating enhanced liquidity and financial stability.
Increase in SG&A Expenses
There was a notable increase in selling, general, and administrative expenses, which rose by $313,000 or 31.8% to $1.3 million for the three months ended September 30, 2025. This rise was primarily due to noncash stock-based compensation and increased salaries, highlighting the company’s investment in its workforce and operations.
Uncertainty in Final Cash Position
The final cash position remains uncertain due to the ongoing tender offer and share buyback process. This introduces a level of unpredictability in the company’s financial outlook, as the outcome of these initiatives will significantly impact its cash reserves.
Forward-Looking Guidance
Looking ahead, Data Storage Corporation plans to focus on strategic acquisitions that offer recurring revenue, particularly in high-value markets like AI-enabled infrastructure and cybersecurity. The company aims to optimize its capital allocation through the completion of the tender offer and share buyback process, positioning itself for sustained growth and profitability.
In summary, the earnings call of Data Storage Corporation reflected a positive sentiment, underscored by strategic initiatives such as the sale of the CloudFirst subsidiary and a strong cash position. Despite challenges like increased SG&A expenses and uncertainty in the final cash position, the company is poised for growth with a focus on strategic acquisitions in promising markets.