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Data Storage Corporation (DTST)
NASDAQ:DTST
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Data Storage
(NASDAQ:DTST)
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Rating:60Neutral
Price Target:
$4.50
▲(5.39% Upside)
Data Storage Corporation's overall score reflects strong revenue growth and strategic initiatives, but is weighed down by profitability challenges, cash flow issues, and a bearish technical outlook. The proposed sale of CloudFirst offers potential upside, but dependency on its revenue is a significant risk.
Positive Factors
Revenue Growth
The robust revenue growth indicates strong market demand and effective business strategies, positioning the company for continued expansion and market penetration.
Strategic Initiatives
Focusing on AI, cybersecurity, and SaaS aligns with industry trends, potentially driving future growth and enhancing competitive positioning in high-demand sectors.
Balance Sheet Health
A low debt-to-equity ratio indicates minimal leverage, providing financial stability and flexibility for future investments and growth opportunities.
Negative Factors
Profitability Challenges
Ongoing profitability issues may hinder long-term financial sustainability, limiting the company's ability to reinvest in growth and innovation.
Cash Flow Issues
Negative cash flow indicates challenges in generating sufficient cash to support operations and growth, potentially impacting financial health and strategic initiatives.
Dependency on CloudFirst Revenue
High dependency on a single revenue source poses a significant risk, especially if the CloudFirst sale impacts revenue stability and diversification.
Data Storage (DTST) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$31.01M
Dividend YieldN/A
Average Volume (3M)85.39K
Price to Earnings (P/E)180.2
Beta (1Y)1.47
Revenue Growth0.53%
EPS Growth-233.01%
CountryUS
Employees53
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)-0.10
Shares Outstanding7,262,436
10 Day Avg. Volume80,399
30 Day Avg. Volume85,392
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.44
Enterprise Value/Revenue0.54
Enterprise Value/Gross Profit1.24
Enterprise Value/Ebitda17.01
Forecast
1Y Price Target
$4.50Price Target Upside5.39% Upside
Rating ConsensusHold
Number of Analyst Covering1
Data Storage Business Overview & Revenue Model
Company DescriptionData Storage (DTST) is a leading provider of innovative data management solutions, specializing in secure and scalable storage systems for businesses across various sectors, including healthcare, finance, and technology. The company offers a range of products and services, including cloud storage, data backup and recovery solutions, and data analytics tools, designed to help organizations efficiently manage and protect their critical information.
How the Company Makes MoneyDTST generates revenue primarily through subscription-based models for its cloud storage services, which provide customers with flexible and scalable data storage solutions. The company also earns income from one-time sales of hardware products such as storage devices and servers. Additionally, DTST offers professional services, including data migration, consulting, and technical support, which contribute to its revenue streams. Strategic partnerships with major technology firms enhance its market reach and product offerings, further solidifying its financial performance.
Data Storage Earnings Call Summary
Earnings Call Date:Aug 14, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 18, 2025
Earnings Call Sentiment Neutral
The earnings call presents a balanced view with significant growth in core services and a strategic direction towards transformative initiatives. However, there are notable challenges including increased net loss, operating expenses, and dependency on CloudFirst. The proposed sale of CloudFirst offers a potential reset for the company to unlock shareholder value and reinvest in future growth.Q2-2025 Updates
Positive Updates
Increase in Total Sales and Core Services
Total sales for the 3 months ended June 30, 2025, were $5.1 million, an increase of approximately $236,000 or 4.8%. Growth was driven by a 6.1% increase in cloud infrastructure and disaster recovery revenue and a 17.3% increase in Nexxis services.
Proposed Sale of CloudFirst Technologies
The proposed sale of CloudFirst Technologies for $40 million represents a substantial premium to the company's market cap. Net proceeds would be approximately $24 million, which could be returned to shareholders and reinvested in growth.
Strategic Growth Initiatives
Plans to reshape and rebrand Data Storage Corporation, focusing on AI, cybersecurity, and SaaS, with a commitment to continued growth and value creation regardless of the CloudFirst sale outcome.
Expansion in the U.K.
Investment in the U.K. with established operations and trained partner sales forces, indicating growth opportunities in the European market.
Negative Updates
Decrease in Equipment and Software Sales
A decrease in equipment and software sales by approximately $95,000 or 12.1% for the 3-month period, attributed to nonrecurring sales and a shift towards subscription services.
Increased Net Loss
Net loss attributable to common shareholders for the 3 months ended June 30, 2025, was $733,000 compared to a net loss of $244,000 for the same period in 2024.
Increased Operating Expenses
Selling, general, and administrative expenses increased by approximately $536,000 or 19.2% for the 3-month period, driven by higher salaries, director fees, and stock-based compensation.
Dependency on CloudFirst Revenue
CloudFirst currently represents approximately 95% of the company's revenue, indicating dependency and potential risk if the sale is not approved.
Company Guidance
During Data Storage Corporation's second quarter earnings call for the fiscal year 2025, the company reported total sales of $5.1 million for the three months ending June 30, 2025, representing a 4.8% increase from the previous year, primarily driven by a 6.1% growth in cloud infrastructure and disaster recovery revenue. For the six-month period ending June 30, 2025, total sales were $13.2 million, a modest increase of 0.6%, largely due to a 9.8% rise in core cloud services. However, equipment and software sales declined by 12.1% and 12.6% for the three- and six-month periods, respectively, as the company shifted focus to subscription services. The cost of sales rose by 4.3% and 0.8% for the respective periods, reflecting investments in a new U.K. entity. Selling, general, and administrative expenses increased significantly, by 19.2% for the quarter and 13.3% for the half-year, due to higher salaries, director fees, and stock-based compensation. The company reported a net loss of $733,000 for the quarter and $709,000 for the half-year, compared to a net loss of $244,000 and a net income of $113,000, respectively, in the previous year. The company ended the quarter with $11.1 million in cash and equivalents, compared to $12.3 million the previous year. The call also discussed the proposed $40 million sale of CloudFirst Technologies, which would result in net proceeds of approximately $24 million, with plans to return a significant portion to shareholders through a tender offer.Data Storage Financial Statement Overview
Summary
Data Storage demonstrates a stable and low-risk financial profile, supported by strong equity and minimal leverage. While revenue growth has softened, the company remains operationally efficient, as seen in its positive cash flow from operations. Future focus should be on enhancing profitability and addressing cash flow deficits for sustained growth.Income Statement
Data Storage showed a stable revenue base with a marginal decline in TTM, achieving a Gross Profit Margin of 43.6% and a Net Profit Margin of 0.8%. While EBIT Margin was negative, the EBITDA Margin remained positive at 5.4%. Notably, the company's revenue growth rate has been slowing, with a recent contraction. The financials indicate a company that maintains profitability despite challenges in cost management.65
Positive
Balance Sheet
The balance sheet remains robust, with a strong Equity Ratio of 80.5%, indicating high asset ownership by shareholders. The Debt-to-Equity Ratio is low at 0.03, reflecting minimal leverage, enhancing financial stability. Return on Equity is modest at 0.9%, suggesting limited profitability relative to investor equity. Overall, the company maintains a conservative financial position with low debt risk.72
Positive
Cash Flow
Cash flows present a mixed picture with a negative Free Cash Flow, although Operating Cash Flow surpasses Net Income, indicating strong operational efficiency. The Free Cash Flow to Net Income Ratio is negative, highlighting potential cash flow challenges. Despite this, the company's cash management remains adept, reflecting a capability to generate cash from operations.58
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 25.46M | 25.37M | 24.96M | 23.87M | 14.88M | 9.32M |
| Gross Profit | 11.13M | 11.10M | 9.58M | 8.08M | 6.42M | 3.90M |
| EBITDA | 808.30K | 2.11M | 1.82M | -2.85M | 1.27M | 1.48M |
| Net Income | -298.62K | 523.21K | 381.57K | -4.36M | 267.84K | -325.59K |
Balance Sheet | ||||||
| Total Assets | 24.42M | 25.28M | 23.30M | 24.09M | 26.33M | 7.75M |
| Cash, Cash Equivalents and Short-Term Investments | 11.12M | 12.33M | 12.75M | 11.30M | 12.14M | 893.60K |
| Total Debt | 574.18K | 673.45K | 601.47K | 1.65M | 2.01M | 3.27M |
| Total Liabilities | 3.19M | 4.11M | 3.55M | 5.14M | 3.72M | 5.83M |
| Stockholders Equity | 21.47M | 21.42M | 19.99M | 19.10M | 22.72M | 2.02M |
Cash Flow | ||||||
| Free Cash Flow | -718.79K | -60.27K | 2.33M | 536.54K | -816.52K | 929.61K |
| Operating Cash Flow | 657.81K | 1.74M | 3.87M | 663.80K | -360.69K | 1.11M |
| Investing Cash Flow | -672.78K | -1.74M | -3.85M | -9.14M | -6.42M | -181.07K |
| Financing Cash Flow | -161.06K | -352.96K | -878.79K | -1.37M | 18.02M | -362.57K |
Data Storage Technical Analysis
Neutral
4.27
Price Trends
4.62
Negative
4.16
Positive
4.07
Positive
Market Momentum
-0.07
Positive
39.08
Neutral
18.10
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DTST, the sentiment is Neutral. The current price of 4.27 is below the 20-day moving average (MA) of 4.50, below the 50-day MA of 4.62, and above the 200-day MA of 4.07, indicating a neutral trend. The MACD of -0.07 indicates Positive momentum. The RSI at 39.08 is Neutral, neither overbought nor oversold. The STOCH value of 18.10 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DTST.
Data Storage Risk Analysis
Data Storage disclosed 33 risk factors in its most recent earnings report. Data Storage reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Data Storage Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | 38.95M | 14.03 | 15.37% | ― | 4.44% | ― | |
60 Neutral | $31.01M | 180.23 | -1.42% | ― | 0.53% | -233.01% | |
55 Neutral | 48.88M | -22.45 | -16.91% | ― | 16.25% | 41.38% | |
49 Neutral | 27.28M | -20.65 | ― | ― | 5.81% | 55.03% | |
44 Neutral | 69.44M | -5.04 | 2131.63% | ― | ― | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
Performance Comparison
DTST
Data Storage
4.27
0.50
13.26%
WYY
Widepoint
5.00
1.46
41.24%
USIO
Usio
1.47
0.11
8.09%
CLPS
Clps
0.98
-0.30
-23.44%
JFU
9F
2.62
0.20
8.26%
TDTH
Trident Digital Tech Holdings Ltd Unsponsored ADR
0.92
-2.88
-75.79%
Data Storage Corporate Events
M&A TransactionsShareholder MeetingsRegulatory Filings and Compliance
Data Storage to Divest Cloud Solutions Business
Neutral
Aug 29, 2025
On August 8, 2025, Data Storage Corporation filed a definitive proxy statement with the SEC for its upcoming annual stockholders meeting on September 10, 2025. The meeting will address the proposed divestiture of its cloud solutions business, which includes selling all assets of its subsidiary, CloudFirst Technologies Corporation, and CloudFirst Europe Ltd. The company received letters from shareholders demanding additional disclosures regarding the divestiture, claiming omissions in the proxy statement. To avoid potential legal disputes and delays, Data Storage Corporation decided to voluntarily provide supplemental disclosures, although it maintains that the original disclosures were sufficient.
M&A TransactionsShareholder MeetingsStock BuybackBusiness Operations and Strategy
Data Storage Sells CloudFirst Assets for $40 Million
Positive
Jul 15, 2025
On July 11, 2025, Data Storage Corporation entered into an agreement to sell the assets of its subsidiary, CloudFirst Technologies Corporation, to Total Server Solutions Holdings, LLC for $40 million. This divestiture, subject to shareholder approval at the annual meeting on September 10, 2025, aims to accelerate CloudFirst’s growth in a private setting and allow Data Storage to pursue strategic opportunities in high-growth sectors. The transaction will result in CloudFirst joining Performive, backed by Renovus Capital Partners, while Data Storage plans to use the proceeds for a tender offer to repurchase up to 85% of its outstanding shares and invest in sectors like AI-enabled SaaS, cybersecurity, and healthcare automation.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.