Data Storage Corporation: Fiscal 2Q21 Financial Results

Data Storage Corporation provided a business update and reported its financial results for the second quarter ended June 30, 2021.

Chuck Piluso, CEO: “I am pleased to report we achieved a 76% increase in revenue for the three months ended June 30, 2021, compared to the same period last year. Specifically, we reported growth across all of our product lines, and expect to maintain strong organic growth going forward. Specifically, revenue for infrastructure and DR/cloud services increased 25%; revenue for equipment and software increased 208%; revenue for managed services increased 269%; and revenue for Nexxis VoIP services increased 19%. We attribute this success to an increase in monthly subscription revenue and additional sales from the Flagship Solutions merger.

“As a leading provider of IBM solutions, managed services and cloud solutions, Flagship’s offerings and established customers are highly complementary to our business. It’s also important to note that the increase in reported revenue for 2FQ21 includes just one month of Flagship results, June, since we completed the merger on May 31, 2021. Looking ahead, we see substantial opportunities to cross-sell solutions across storage and Flagship’s respective clients. We are also benefiting from other synergies following the acquisition, which we believe will help drive further operational efficiency across the organization.

“Given our expanded offering following the acquisition, we realigned our sales and marketing strategy to focus more heavily on four key verticals, where we have particularly strong sector expertise and see significant growth opportunities. These verticals include sports, banking and finance, healthcare, and government. Although we will still focus on opportunities in other sectors, we believe this new strategy will help accelerate our organic growth. Overall, we believe we are well positioned. The target marketplace for infrastructure-as-a-service and DR-as-a-service is estimated at over one million logical partitions, virtual servers, in this mission critical technical environment. Our goal for the remainder of 2021 is to increase our presence in the IBM Power infrastructure cloud and BC marketplace and to further enhance our position as a leader in this market.

“Finally, we have enhanced our balance sheet. We ended 2F21 with approximately $3.1 million of cash and cash equivalents after payments for the acquisition of Flagship. Since the end of the second quarter, we generated an additional $3.4 million in net proceeds from the exercise of warrants and raised $7.6 million through our recent registered direct in July. As a result, we believe we are positioned to execute on our organic growth strategy, as well as explore opportunistic and accretive acquisitions.”

Financial Results
Revenue for 2FQ21 was $3.5 million, an increase of 76%, compared to $2.0 million 2FQ20. The increase was primarily attributable to additional sales from the Flagship merger and an increase in software and equipment sales, and infrastructure and DR/cloud services.

Selling, general and administrative expenses for 2FQ21 were $1.6 million compared to $1.0 million for 2FQ20. The increase in expenses was primarily attributable to increases in salaries, professional fees, and advertising expenses as a result of the Flagship merger.

Net income for 2FQ21 was $135,500 or $0.03 per share, as compared to $183,000 or $0.05 per share for 2FQ20.