Data Storage Corporation: FY20 Financial Results

Data Storage Corporation provided a business update and announced its 2020 financial results.

Chuck Piluso, CEO, commented: “We continue to achieve meaningful financial performance and profitability despite the impact of Covid-19 on the global markets, as evidenced by a 10% increase in revenue to $9.3 million for the year ending December 31, 2020 as compared to the year ended December 31, 2019. Importantly, we had strong revenue growth in each of our key products: Nexxis VoIP services increased by 44%; infrastructure and DR/cloud services increased by 6.8%; equipment and software increased by 16%; and managed services increased by 4%. We achieved profitability while investing resources and capital in Nexxis, adding leadership for channel management, rounding out our product suite, as well as investing our income into further advancements in our infrastructure and operations to support our long-term growth initiatives. At the same time, we continue to carefully manage our expenses. Overall, we have built a scalable business model focused on high-margin recurring revenues.

“Heading into 2021, we believe we have set the stage for continued growth. Due to the Covid-19 outbreak and the critical need for safe remote collaboration, we expanded our offering of cybersecurity solutions for remote tele-computing with our new product, ezSecurity. We also launched a new remote collaboration program for SMBs. As part of this new program, we are offering free migration services from Exchange to Microsoft 365, along with support for comprehensive voice communications (hosted VoIP, IP phones, cloud PBX) and video conferencing. In addition, we expanded capacity through our new Dallas, TX data center location to accommodate increased demand for our portfolio of ezServices, including ezBackup, ezRecovery and ezAvailability, adding to our existing network of data centers and fiber backbone.

“At the same time, we expanded our North American footprint, including new markets in Canada, where we added two new tier-3 enterprise data centers. We also recently announced a joint venture with Able-One Systems Inc, an IBM market leader, to provide our portfolio of enterprise IBM cloud infrastructure services to customers in Canada. We look forward to working closely with Able-One to develop new opportunities in Canada and solve technology issues for businesses seeking superior IBM infrastructure and DR services.

“In addition to our organic growth, we are also exploring potential opportunities to acquire cash flow positive businesses with complementary products and services. Most recently, we entered into a definitive Agreement with Flagship Solutions, LLC to merge into our wholly-owned subsidiary, Data Storage FL, LLC, at which time Flagship will become a wholly-owned subsidiary of our Company. Flagship is a provider of IBM software, services, equipment and cutting edge intelligent analytical and decision-making solutions, providing managed services and cloud solutions worldwide that include cloud-based server monitoring and management, 24×7 help desk support, and data center infrastructure management. We believe this transaction will be highly synergistic with our existing IBM business. This merger provides a comprehensive one-stop provider approach to cross-sell solutions across our respective enterprises and middle-market customers. Overall, we remain extremely encouraged by the outlook for the business and believe 2021 will be a transformative year for the company.”  

Financial Results

• Net sales for the year ended December 31, 2020 were $9,320,933, an increase of $837,325 or 10%, compared to $8,483,608 for the year ended December 31, 2019. The increase was primarily attributable to an increase in infrastructure and disaster recover/cloud subscription services due to a higher demand for IBM Power Systems cloud hosting, increased equipment sales, as well as an increase in demand for VoIP services related to the Nexxis division in which it was invested $488,438 which impacted core profitability by $(133,282).
• Cost of sales for FY20 was $5,425,205, an increase of $678,904 or 14%, from $4,746,031 for FY19. The increase in cost of sales was primarily attributable to improvements and expenses associated with the data centers for infrastructure and DR cloud services, including new IBM systems, storage and network equipment for the Raleigh, NC expansion and new Dallas data center location. There were also additional costs related to the Nexxis division, and equipment purchases for sale.
• Operating expenses for FY20 were $3,896,791, an increase of $365,738, or 13%, as compared to $3,531,053 for FY19. The net increase was a result of an increase in salaries, stock option compensation, software as a service, advertising and Nexxis.
• Net income for FY20 was $173,359, as compared to a net income of $29,323 for FY19.