Data Storage Corporation

Good day, ladies and gentlemen, and welcome to the Data Storage Corporation third quarter 2022 conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Alexandra Schilt. Ma'am, the floor is yours.

Thank you. Good morning, everyone, and welcome to Data Storage Corporation's 2022 third quarter ended September 30th, 2022 business update conference call. On the call with us this morning are Chuck Peluso, Chairman and Chief Executive Officer, and Chris Panagiotakos, Chief Financial Officer. The company issued a press release this morning containing third quarter 2022 financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020. Before we begin, I'd like to remind listeners that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended that are intended to be covered by the safe harbor created thereby. Forward-looking statements are subject to risks and uncertainties that could cause actual results performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by, or that otherwise include the words believed, expects, anticipates, estimates, plans, and similar expressions or future or conditional verbs such as will, should, would, may, and could are generally forward-looking in nature and not historical facts. although not all forward-looking statements include the foregoing. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can provide no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the company's expectations include but are not limited to the company's ability to leverage the scalability and performance of flagship solutions the company's ability to benefit from the IBM Cloud migration underway, the company's ability to position itself for future profitability, and the company's ability to maintain its NASDAQ listing. These risks should not be construed as exhaustive and should be read together with other cautionary statements included in the company's quarterly report on Form 10-Q for the quarter ended September 30, 2022, and annual reports on Form 10-K and current reports on Form 8-K filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it was initially made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances, or otherwise. I now like to turn the call over to Chuck Galluso. Please go ahead, Chuck.

Thanks, Allie, and good morning, everyone. We continue to witness strong revenue growth, evidenced by achieving revenue of $4.4 million for the third quarter ending September 30, 2022. This represents a 14% increase compared to the same period last year. Notably, our revenue for the nine months ending September 30, 2022 increased 80% over the same period last year, reaching $17.9 million. Our decades of experience providing an array of multi-cloud technology solutions, properly allocated investments, and highly skilled employees are the foundation to our success that has allowed us to firmly position ourselves as a leader within the industry. I'd like to note that we provide solutions to a multi-billion dollar marketplace. In fact, according to Fortune Business Insights, the cloud managed service industry in North America was $16.3 billion in 2019 and has been growing at a rate of 13.8% compounded annual growth rate, bringing the number to $24 billion by the end of 2022. Disaster recovery is projected to be at $3.6 billion in the U.S. by the end of 2022, which represents 35% of the overall 10.3 global marketplace based on Grandview Research disaster recovery solutions market size report. Our Nexus solutions fit well with our dedicated internet access, a critical component to access cloud services. Further, the steadily growing VoIP market is expected to reach 90 billion worldwide in 2022, with a compounded annual growth rate of 3.1%, with 17 billion in the U.S., according to Global Newswire market analysis and insights. Our goal is to aggressively penetrate these markets while executing on our strategy of securing high margin recurring subscription-based and managed service contracts. As we see more companies migrating their IBM power infrastructure to the cloud, we believe this propel our solutions to the forefront of the industry, providing us the potential to capitalize on these growing multi-billion dollar markets. We see this migration underway as the future of our industry and we are well positioned to take advantage of these opportunities. Given the migration to the cloud within the IBM market that I have been discussing over the past few conference calls, currently only 15 percent of the IBM power servers are utilizing the cloud today, despite over 1 million virtual IBM power servers globally. With limited competition in the market, we have the platform and the talent to capture the migration opportunities in front of us. The company has invested millions of dollars in six Tier 3 data centers in the U.S. and Canada. The equipment and technical teams build our solutions. This is not an IBM reseller arrangement. We have the employees overseeing the services and operate our own equipment, cages and racks in the data centers. Today we service over 350 companies. We compete with just four or five companies that have this expertise. helping companies looking to migrate to the cloud. And yet I believe we do a better job, less painful, more efficiently, and cost competitively. Our company is a leader in this industry. I would also like to reiterate that the businesses that are increasingly under pressure to improve the effectiveness and efficiency of the information and storage systems, whereby accelerating the migration from self-managed technical equipment and solutions to fully managed multi-cloud technologies to reduce cost and compete effectively. Additionally, in today's environment, capital preservation is an encouragement to move from a capital-intensive, on-premise technology to a pay-as-you-grow, CapEx to OpEx model. These trends create an opportunity for cloud technology service providers and demand for fully managed cloud and cybersecurity services across major operating systems, an addressable market of approximately $48 billion in January recurring revenue in the U.S. and Canada. Demonstrating our commitment to security, we achieved ISO certification for our Cloud First and Nexus divisions. This third-party certification validates our extensive internal protocols and security measures that ensure our customers' data and information has been addressed implemented, properly controlled in all areas of our organization. We believe this certification will also assist us in accelerating our customer adoption due to the fact many organizations seek this certification prior to implementing certain solutions. We remain committed to adhering to the highest level of security standards for our company and for the trusted support of our clients. Importantly, we are undertaking activities that we anticipate will further improve our margins and profitability, as well as accelerate our growth. This includes realigning management and operations. We have recently centralized service delivery and infrastructure. Our sales engineering teams now can better utilize our client proposal tools and software across combined sales teams. Additionally, we are establishing a new major accounts team, that will be responsible for supporting our large enterprise-level clients, as well as continuing satisfying ongoing equipment, software, and IT requirements. We believe the changes stated will significantly improve our infrastructure solutions and recurring revenue to a one-time sales ratio, and as a result, will enhance gross profit and margins. At the same time, we plan on expanding our international programs and strengthen our established and successful U.S. sales and marketing programs. To streamline our operations, we are reducing redundant operating expenses within the organizations. We have realigned our management team to further increase our profitability. I am also pleased to report that we achieved positive adjusted EBITDA for the third quarter of 2022 and believe our initiatives that I have laid out will advance us towards increased profitability and improve margins. On a final note, we have a strong team, a robust proposal pipeline, and limited competition. With over $11 million in cash in the bank, we are well funded, well positioned to execute on our growth strategy, improve our margins, increase profitability, all while maintaining leadership position in the industry. With that, I'd like to turn it over to Chris, our CFO, to discuss our third quarter financials. Please go ahead, Chris. Thank you, Chuck.