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spk06: Ladies and gentlemen, good morning and welcome to the Data Storage Corporation first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Alexandra Schultz, Investor Relations. Please go ahead.
spk01: Thank you. Good morning, everyone, and welcome to Data Storage Corporation's 2024 First Quarter Business Update Conference Call. On the call with us this morning are Chuck Peluso, Chairman and Chief Executive Officer, and Chris Patagiotakos, Chief Financial Officer. The company issued a press release this morning containing its 2024 first quarter 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 Security Litigation Reform Act of 1995 and 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, intends, projects, estimates, plans, or 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 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 questionary statements included in the company's quarterly report on Form 10-Q for the quarter and in March 31, 2024, annual reports on Form 10-K and current reports on Form 8-K filed with the Securities and Exchange Commission. Any forward-looking statements speak 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'd now like to turn the call over to Chuck Peluso. Please go ahead, Chuck.
spk02: Thank you, Allie, and good morning, everyone. We continue to execute on our business growth strategy, including securing new contracts with high-profile clients as well as streamlining our operations for efficiency. As a result of our efforts, we witnessed a 20% increase in revenue to $8.2 million for the first quarter of 2024. Additionally, our gross profit increased 42% with the gross profit margin increasing to 36% from 30%, demonstrating the success and scalability of our business model. Importantly, we achieved profitability for the first quarter and believe as we continue to execute our strategic initiatives, we will continue to grow revenue and increase profitability. We began the year by consolidating our flagship subsidiary, InterCloud First. This strategic decision combines the unique strengths and expertise of the respective business units. positioning us to optimize operations, leverage technical teams, realize greater efficiencies, and improve internal resource allocation. As a result, we expect to enhance our cross-selling and up-selling opportunities among our customer networks, ensuring continued delivery of outstanding value. With the experienced leadership teams and combined organizations of both cloud-first and flagship, We are confident in our ability to establish a scalable organization primed for accelerated growth. Let's discuss these contracts that occurred in the first quarter. First, we expanded our contract with an existing multinational telecommunications company. This is a six-figure contract. We are very proud of our successful collaboration with this multinational corporation, spanning over 12 years. Beyond our existing equipment and services, we developed a custom solution. We are now implementing an innovative disaster recovery backup solution boasting advanced technology. This solution enhances their storage capacity while reducing tape usage and ensuring compliance across multiple countries. With installation moving smoothly, we eagerly anticipate the continued expansion of our collaboration with this organization. Furthermore, one of the largest insurance companies in the United States has chosen to migrate its data center to the cloud for one of its divisions. Alongside the cloud migration, we will be delivering hosting and managed services, incorporating a comprehensive suite of advanced security solutions to uphold the utmost standards of data protection and compliance. Following an assessment of numerous providers, the insurance company opted for our services for its critical undertaking. The decision was influenced by our company's exceptional reliable data circuits and proven track record in delivering data management and cloud services to Fortune 500 companies and top-tier financial firms. We believe this contract underscores our ability to address the requirements of prominent enterprises. and our commitment to advancing technology that fosters our clients' growth. Being selected illustrates the significance of our offering and the importance of robust security measures in today's digitally driven and risk-laden business landscape. We are confident that our solutions will deliver exceptional results and pave the way for expanding our solutions across additional divisions and geographies in the future. As I discussed in the last call, part of our strategy is international expansion. There is demand for our solutions globally, and we are proud to report the opening of Cloud First London office in the second quarter of this year. This strategic expansion marks a significant milestone in our strategy to serve a global clientele and further Cloud First presence in key global markets while increasing our international footprint and further supporting our current multinational clients. In addition, we recently moved to new and expanded headquarters in Melville, New York. We're excited about our new space, which we increased square footage by nearly 40 percent without a substantial rise in expenses. These new offices are designed to bolster our growth, encompassing accounting, technical teams, sales, and marketing initiatives. Further validation of the demand for our solutions is the continued increase in visitors to our website, which was over 43,000 in the first quarter of this year. We also continue to support our nurture list, which contains thousands of organizations interested in potential implementation and education of our services. We intend to take advantage of these avenues to secure new contracts and increase our footprint within the markets. Currently, we serve more than 450 companies and strive to expand this impressive client base. Data center firms specializing in window-based infrastructure platforms rely on us for our expertise in the IBM platform. Partnering with these infrastructure firms offer a chance to broaden our distribution channels, leverage our talented staff, and optimize our deployed assets. And before I turn this over to Chris for review of our financials, I'd like to discuss our new board members. First, Cliff Stein returned to our board of directors. Cliff is a seasoned entrepreneur, adept executive with over 30 years' experience in establishing and managing a thriving real estate advisory firm. His background as a skilled attorney further enriches his expertise. We are confident that Cliff's skill set will provide invaluable guidance to the company as we pursue growth, whether through organic means or strategic acquisitions. Having previously served on the board and contributed to numerous strategic growth initiatives, we are excited about his renewed engagement. In addition, we appointed Nancy Stallone and Ewayne Mitchell. Nancy's impressive background in corporate finance, auditing, accounting will be instrumental as we pursue strategic growth initiatives, including international expansion and exploring potential acquisitions. Duane Mitchell's legal proficiency, combined with his expertise in data privacy, cybersecurity, and technology, will greatly enhance our board and support our growth. We remain committed to upholding the highest standards of corporate governance and look forward to their contributions as we advance our business model. Overall, with continued execution of our strategic plan, we achieved profitability for the first quarter, secured new and expanded contracts, increased our penetration with the domestic market, and actively expanded into international markets. We are also exploring potential acquisitions that would assist and support our growth, and more importantly, complement and improve our current operations. We believe that our company has reached a pivotal moment. We are exceptionally well positioned to enter key international markets, leverage upselling and cross-selling potentials for our offerings, and secure additional subscription-based contracts. These strategic initiatives set the stage for long-term profitability. At the same time, we've carefully managed our expenses and have preserved a strong balance sheet with over $11.9 million in cash and marketable securities. No long-term debt as of the end of the quarter, which provides us the flexibility to deploy capital efficiently and effectively to support our long-term growth and drive value to our shareholders. With that, I'd like to turn this over to Chris Panagiotakos, our CFO to discuss our financials. Please go ahead, Chris.
spk03: Thank you, Chuck. Good morning, everyone. Total revenue for the three months ended March 31st, 2024 was $8.2 million, an increase of 20% compared to $6.9 million for the three months ended March 31st, 2023. The increase is primarily attributed to an increase in infrastructure and disaster recovery cloud services and equipment and software sales. Cost of sales for the three months ended March 31st, 2024 was $5.3 million, an increase of 10% compared to $4.8 million for the three months ended March 31st, 2023. The increase of 10% was mostly related to the increase in infrastructure and disaster recovery cloud services and equipment and software sales. Selling, general, and administrative expenses for the three months ended March 31, 2024 were $2.8 million, an increase of approximately $620,000, or 29%, as compared to $2.1 million for the three months ended March 31, 2023. The increase was primarily due to an increase in advertising expense, commission expense, salaries, and headcount growth. Adjusted EBITDA for the three months ended March 31, 2024 was $680,000 compared to adjusted EBITDA of $336,000 for the same period last year. Net income attributable to common shareholders for the three months ended March 31, 2024 was $357,000 compared to $50,000 for the three months ended March 31, 2023. We ended the year with cash and marketable securities of approximately $11.9 million at March 31, 2024, compared to $12.7 million at December 31, 2023. Thank you. I will now turn the call back to Chuck.
spk02: Thanks, Chris.
spk07: I'd like to open it up for questions, if we have any. Thank you.
spk06: Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question is from the line of Matthew Galenko with Maxim Group. Please go ahead.
spk05: Hey, thanks for taking my questions and congratulations on the strong first quarter. I guess, firstly, can you touch on maybe the pipeline of, you know, Fortune 500, you know, customer opportunities and kind of scope expansion opportunities within your existing customer base?
spk02: Well, I can't segment the Fortune 500 companies that, first of all, good morning, Matt, and thank you for the question. I can't separate what's Fortune 500 and what's not within the base, but I can tell you that our pipeline today is around a total contract value of around $10.8 million, I believe. And, you know, if you average that out, you'd see that, you know, the 31 months are probably the average term when we look at the term. The non-recurring on that, you know, on that is around $220,000 approximately. And I believe that the monthly amount that's sitting there is approximately $340,000. So, you know, it's a very solid amount. it's very solid pipeline for recurring. That's only recurring. We're not talking about non-recurring. I always get concerned with the non-recurring. It's lumpy. They sometimes postpone it based on budgets or they're not ready yet. So that's just the recurring piece of it. In the past, we've always combined the non-recurring with the recurring, but this is the focus on the recurring subscription-based stuff. You know, we also have the work in process that's being, you know, being installed as we speak. So we have, you know, numbers on that along with our remaining contract value. But I think you're asking more about the pipeline, correct?
spk07: Correct. Yep.
spk02: Yeah. I mean, the work in process is also pretty good as well. You know, that number will increase it because with work in process, with not having to increase your technical teams, And with subscription gross profit margins at 50%, it's a full contribution, essentially, to profit. So our work and process numbers are pretty good. I haven't given you that. I don't know if you're interested in that.
spk05: Yes, if you have it, I'd love to hear it.
spk02: Yeah, it's approximately executed contracts that are being installed of approximately, I believe, $100,000. of which we'll see some of that in the second quarter, and we'll see some of that in the third quarter. And that's, you know, hopefully the sooner it goes up, the more months of revenue we get and the more profit. But, you know, with a 50% margin typically, and we don't believe we have to add technicians for that. So, you know, it's a nice contribution to profit.
spk05: Thank you. And I wanted to maybe touch on one of the large deals you referenced this quarter. I think you mentioned you developed a custom disaster recovery solution. I think you mentioned reducing tape and maybe adheres to multinational compliance. Did I understand the scope of that project correctly? And was that a lot of custom work or is that applicable that you could bring to other potential customers?
spk02: You know, on the IBM systems, according to the size of the client, you know, if it's a very large client, so when we say basically that the marketplace for infrastructure as a service on the IBM platform is 36 billion, and then we believe that 40 percent of that 36 billion will actually migrate over the next, I'll say, between three and eight years, you're talking about $400 million in annual recurring revenue. So when we think about that other 60%, the very large companies, and we're saying let's say 50% because we believe that 10% will migrate off of the platform. When we take that 50%, they're very large. They're larger than any of the companies. So they have their own equipment. They have to buy the equipment. They have to buy tape libraries. They have to maintain software renewal and hardware maintenance. And that's deployed internationally. So when we look at these very large accounts, they could be using virtual tape libraries or actual tape libraries. And so with that, we need to develop custom systems to be able to support them and come up with unique ways of having them accelerate their recovery, to have their file transfers moving faster into their systems. So they're mainly custom-type builds that we do when we get invited in on that 50% that we believe will continue to maintain their own equipment and we're there to support that and that's why you'll see equipment sales you know and software renewal and hardware maintenance and it creates that lumpy situation for us but you know we love it and what ends up happening is we support them with our other types of managed services so but it you know it's a you know disaster recovery and storage application on these on these tape libraries So, you know, you have to make that separation between the people that are going to migrate and the people that are so large. They have extremely large staff. It's, you know, that you're not going to get Deutsche Bank, Citibank, and those folks. They're just bigger than anyone. But, you know, for the large customers that we support, we're there to sell them equipment, which we are an IBM high-level partner. Right. And we have the expertise within our technical teams to support, sell, and increase our revenue in those areas. But it's not recurring, typically, other than the software renewal and hardware maintenance.
spk05: Got it. Okay. And I'm sorry, last follow-up, and I'll jump back in the queue. So for something like that, where you're working on your disaster recovery, but it's not recurring, how do you flow that through your the kind of line item buckets that you normally break out on the queue. Would that hit the disaster recovery and infrastructure line or would that hit the software and equipment line or still mix across both?
spk02: You know, it's tricky on that. We maintain classes or each of the products that are sold. So when you look at subscription recurring revenue, it's typically annual recurring revenue, which is software renewal, hardware maintenance, subscription services, disaster recovery, and hosting. And then on the equipment and software line on the financial statements, that's where you'll see equipment that's sold with the software. We also keep that software, equipment and software line Anything that is software, that's annually recurring in the equipment and software chart of accounts. So it is bifurcated. It is in the financials and it is separated. But, you know, if you wanted a further breakdown, we were able to break down equipment and the different types as well as the software and whether that's new software or recurring, annual recurring software. So we do break it down. But you would be looking at equipment and software as all those things that you know, are one time typically.
spk07: Got it. That's helpful. Thanks.
spk06: Thank you. Our next question is from the line of Adam Waldo with Lismore Partners. Please go ahead.
spk04: Good day, everyone. Thanks for taking my questions, Chuck. I hope you can hear me okay. Sure, Adam.
spk02: Hi. How are you? I'm well. I hope you're well also. Doing fine. Doing well.
spk04: So I want to explore a few different topics, if we may, annual recurring revenue, new business development activities, and then sort of what we think the ongoing incremental margin structures of the business will look like now that you've consolidated cloud person flagship during the first quarter. On the ARR side, can you give us the dollar value of ARR as you exited the March quarter?
spk02: Do you have that, Chris?
spk03: I don't have it handy. We're going to have to get back to you on that. Okay. Fair enough. I'll follow up on. Oh, I'm sorry.
spk02: Yeah, just if I could. So, in our annual recurring revenue, we have subscription-based business, And then the software renewal and hardware maintenance is typically in our annual recurring revenue. And we keep track of that from a forecasting point of view because it continues to add to the baseline for the next year. I think, Chris, it was somewhere between 17 and 18 million, something like that. So that's the 18 million.
spk04: Okay, so you're right about on what you were targeting. Okay. No, that's great. And then On the new business development side, obviously the number of inbound inquiries continues to mushroom through your websites. What are you all doing from a sort of corporate business development standpoint to try to increase the level of those indications of interest into entering the top of your sales funnel with an actual RFP? Are there new initiatives as you've redesigned the websites or new initiatives you're taking on the business development side. Give us a sense for that as to what you'll be pursuing this year to try to improve convergence there into RFPs.
spk02: Sure. You know, it's very, very challenging. What happens is, first, to make the overall what goes on, I'll use the term, you know, organizational behavior, is that the folks that are watching this equipment and maintaining this equipment are aging out. An investment has been made in the applications that are running. So you can graduate from school from computer, you know, whatever, software, whatever it is, and you can then go work and work on these applications. But managing the equipment, these folks are aging out. So as that happens and retirement happens or, you know, whatever, you know, go off to bed, whatever, you know, in the case of people dying, you know, the CFOs, the CIOs are concerned that these applications have to continue to run. So with that, this migration is taking place. They've already moved maybe a lot of their Intel type stuff over to Amazon, Google, and, you know, the whole cast of thousands that are in that place. And so now what are they going to do with this, with the IBM equipment? So long story long, probably more than 10 years ago, I would say more than 10 years ago, I was calling with the sales rep on the International Banks in Manhattan and These international banks all have IBM systems. Yesterday, I'm in my office. I'm listening to one of our business development team, Jill. She's excellent. She's been with us for a while. And I hear her speaking to this international bank. And what ends up happening, she comes in and says, Chuck, you're bringing me luck. Look at this lead. I just told you, you know, I didn't get a lead in a little while, and all of a sudden you're here, you're bringing luck. Then she goes into Salesforce and finds out my name is there because I had visited with that international bank 12 years ago. So this migration is underway. They knew us. They knew us because there was a visit there. So we talk about business development, Hal Schwartz, who's the president of Cloud First, you know, outstanding job on search engine optimization, working with our marketing companies, Google, AdWords, and, you know, to get the lead flow going in. And what ends up happening, a phone call happens, conversations happening, you meet someone at a show, and it goes into our nurture list. And then we have folks that call this nurture list to see if they're interested in a proposal, see what stage they're at. It's very hard to say we're going to go hire 30 people, we're going to go spend all this money on a direct sales force, and frankly, believe it might be a failure. I think you can have a very strong team, but you can't build what was existing 30 years ago with direct sales force. So a lot has to depend on inbound leads, networking, trade shows, folks that you've dealt with or reached out to over time. 15 years. And now that they've moved the platforms off on the Intel side, many of them, they're calling on us. And there are only a few competitors. And we are, frankly, one of the leaders. We do have Intel infrastructure in our data centers. We have both. But when we advertise, when Hal has his programs going on, it's always geared towards the niche platform that we have, which is the IBM platform. But we do both. So when we get one for IBM and they haven't migrated yet their Intel systems, we get that too. So business development has to do a lot with inbound marketing programs. I know it was a long answer, Adam, but there's a lot to it. But it gives you the idea that you need to be around for a while. You need to be credible. You have to have these inbound programs so you're high in the rankings, which we are. And then you have to have a very strong team that's backed by a strong business development team that's backed by a strong technical team to be able to bring the business in. And we're pretty efficient with it.
spk04: Very helpful. And then as we go forward, obviously, having consolidated CloudPerson flagship now, What do we think the sort of steady state approximate range on services gross margin is going to be? And what do you think the incremental or variable EBITDA margin on new revenue looks like as you've consolidated those operations?
spk02: Well, you know, we're not really reporting, you know, telling anybody what our non-recurring proposals are outstanding because some of them are very large. And some of them are with existing customers. So when we say, well, gee, we have, you know, a $10 million proposal outstanding for, you know, existing client, we don't know what quarter or what year it might even happen in, although planning goes on. So it concerns us. So when you do see the margins at 38% or 35% or, you know, under that 50%, you know that it's equipment type sales that are happening or a renewal of a large software renewal or hardware maintenance. So it's very, very hard to predict. So we have to really separate it into two looks. Flagship in the past was primarily managed services. which also Cloud First used to do much more of that, and now it's a slightly different business, and selling equipment to a large group of clients. That's kind of slow to a degree, you know, because we try to move them over. So what ends up happening is if, you know, you have someone that wants to buy, you know, $2 million in equipment, the business development people are in there saying, why are you buying the equipment? We'll give you a proposal for that, but let's get you on hosting. You want to experience that. And what it's like, we'll put you up on a trial, you know, proof of concept, and you can see. So what happens is you lose that equipment sale one time, lumpy, and you move them over to what could be a 60-month contract for subscription, hosting, and disaster recovery. So it's very hard to predict what the margins would be. But when you do see a margin greater than 45%, you know that recurring revenue has been high for that quarter. We'd like to maintain 80% subscription revenue and 20%, you know, one-time equipment, professional services, things like that. So we like 80-20. But when you start seeing something that's 60-40, you know, a large account came in, margins are going to be lighter, but we put more cash on the balance sheet. And we still do get from that every year software renewal and hardware maintenance on that equipment. So there is a recurring piece to that.
spk04: Okay, thank you for that color. Last last one, if you'll permit me, you opened the new London office in the quarter. How does that play into your previous initiatives on the value added reseller or distribution partner side in the UK? Is that going to that London office can be part of that initiative? Or have you decided to build your own sort of captive sales and distribution effort in the UK?
spk02: What our plan is is to build a distribution channel. So the folks that are working there right now, the individuals, their objective is to get distributors, and those distributors hopefully have clients that have IBM platforms. Once that's up to a certain level, that's how Schwartz and myself are comfortable with, and we'll deploy equipment into data centers. You know, these folks are working with data centers today and folks that already sell an Intel side platform. So we're pretty confident. We spent a little time over there. It's going well early on. And the company's being registered there. We're not registered yet. We signed the lease and all. We've hired a firm that's working on registration of the company. But You know, there's some very good activity. We're happy about it at this particular point, but I'll continue to update everybody as it moves along.
spk04: Great. Thank you very much.
spk03: Hey, Adam. This is Chris. The ARR for the quarter was approximately $3.1 million.
spk04: $3.1 million booked in the quarter?
spk03: In the quarter, correct.
spk04: Okay. And so is that just a straight-line annualization then, Chris, or are there some timing things? No.
spk03: It's timing. It's not a straight line.
spk04: Okay, so is that still annualized out to the $17-18 million that Chuck and you spoke about earlier?
spk07: Yes. Okay, thank you very much.
spk06: Thank you. Our next question is from the line of Matthew Galenko with Maxim Group. Please go ahead.
spk05: Hey, hello again. Just a follow-up. I guess given your comments on the go-to-market and how you sort of go after that pipeline of, you know, IBM customers that are, you know, transitioning or could transition to cloud, how does that inform your M&A strategy? And, you know, what sorts of assets would you look at um today if you know sort of throwing dollars at a you know building you know bigger and bigger sales force isn't necessarily the uh uh the strategy you're looking for to grow that business you know matt it's a very interesting question because you really as i mentioned you can't go out and find you know 50
spk02: 50 or 30 or 100 sales reps all of a sudden, you know, and no one wants to meet with people typically. So you have to have this robust inbound program at the same time having a good reputation and having reached out as part of that nurture list. So, you know, when we think about pipeline, you know, how did that pipeline come about? Well, we have distributors we call channel partners, and they have a customer base of folks that are ready to migrate. So those proposals are in there. There's folks that came in through either Google AdWords or, you know, up in the rankings organically on that, and they've come in that way. And then we have folks that, you know, are out there actively that are talking to clients that have purchased equipment, you know, over the years with Flagship and with Cloud First. But when we talk about M&A, you know, what we look for is folks that will expand our distribution channel. They might have a high level of distributors. Maybe, you know, I talked to a company a few months ago that they said they had a thousand distributors, but it was under a software product, you know, and we're still talking to them. But, you know, it wasn't the type of distributor that I think would align with us. So we've looked at many deals, but, you know, their technical teams, distribution, maybe a unique product. You know, we're looking for certain folks in the cyberspace that are there that have a 24-hour operation, but not the software itself, and they're partners with the top, you know, cyber companies. But it's difficult to find companies that we look for between $10 and $15 million that may be, you know, in some sort of a covenant default, and we can come in and save it, but a solid company. someone that's looking to retire, but it's a very, very difficult. So what we decided to do is to continue to look, and we even have a call this afternoon, Hal and I, decided to continue to look for these M&A opportunities, but to spend the money organically. Now, when we spend the money organically, we're going to get beaten up on our P&L because that's going to be an expense versus the acquisition, which would be on the balance sheet side. But we're going to try to do both. So we are spending organically, and UK was one of those efforts, along with the expansion in the U.S. You know, in the case of M&A, we continue to look for these $10 million to $15 million companies. But a lot of them, it's a tough segment to look at. And with $11 million, $12 million in the balance sheet, we don't want to wipe that out. We want to keep cash from the balance sheet. The company is very stable, very solid, great margins, a great customer base, fantastic renewal rate. But, you know, we don't want to go jump in and have a situation where someone's going to make us bleed because they're burning a, you know, They're burning $2 million a year, and they've been in business for five years. So we're looking at everything in answer to your question, Matt.
spk07: I appreciate that.
spk06: Thank you. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and 1. Our next question is from the line of Bobby Cohen with Merger Monday Capital. Please go ahead.
spk00: Hi, Chuck. This is Bobby Cohen. I had one broad brush question. When do you project dollar one from international markets?
spk02: Well, today – hi, Bobby. Today, we have international customers today. So we generate revenue internationally from folks that we serve in, I think, like I'm going to estimate around eight countries that we already have. We have equipment with a partner in France, Weber. So, you know, we're serving – you know, the Bank of Haiti. So we have that. I would say, though, to answer the question directly, I would expect that over the next 90 days, we would have enough information to be able to decide to deploy equipment. I think we've spoke about it, you know, as a company strategically, that we should know within 90 days on the distribution. And then I would look at, you know, the September timeframe we've been talking about, Hal and myself, And Chuck Polillo, our CTO. And we think that that would be around the September timeframe on that. Unless they want to be hubbed like the other clients are, you know, out of the U.S. Because we serve right now international clients that are hubbed out of the U.S. But there is some European regulations and all. So if we can hub it out of the U.S. to get started initially and then migrate them over. But we're looking at September timeframe. to deploy equipment. So you're looking at the fourth quarter, I would say, for international revenue that originates from equipment that's in the UK.
spk00: Okay. Terrific. And one other question. You touched upon it, but maybe you could shed a little bit more light. How robust is your appetite for M&A? I know you're going to use a measured approach, but are there many opportunities out there
spk02: Well, we've been working with Maxim and their team has been very busy to find companies for us. Plus we have, you know, relations with around three other firms that are looking for us. I will tell you, Bobby, we probably put out, I don't know, over the last six months, probably five term sheets, letters of intent on it. And after a further due diligence, you know, we decided not to do it. We've probably had over, five additional calls with companies that we didn't get as far as a letter of intent or a term sheet. So we're very, very active with it. We continue to look for the right partner to bring in. You know, this is my fourth company, and I will tell you I was trained by two Fortune 10 companies. Some of the folks that are in these businesses started from scratch when they got out of college. And, you know, it's like they invented white bread. And it's, you know, it's a very, very difficult personality when they never worked for anyone. And it becomes difficult to bring them into and assimilate. I believe we did a pretty good job with, you know, with a number of companies that we did purchase through the years. But it's very, very difficult in that $10 to $15 million space. And we can't move higher than that, at least that we see, unless they have some bank debt that we can take over. And we know where the interest rates are sitting right now. And as a company, we're really we're not big on debt because we're really growing at a pretty good rate and we're pretty stable. And we're we're our EBITDA numbers cloud first EBITDA. Chris, what was cloud first EBITDA first quarter? What do you have on cloud first? I mean, it's a big number. Remember, we look at EBITDA is consolidated with headquarters. So the EBITDA number, I think the margin is in 30% EBITDA margin on Cloud First. So it gives you a little feel for it. So we're doing fine. So we're all looking for it. We have the appetite for M&A. We want to do M&A. But it just needs to be the right thing. Everything starts out right, as we all know. And, you know, it's the question of how it ends.
spk03: Q1, $1.2 million in EBITDA for Cloud First. So pretty good.
spk02: But we do have the appetite and answer to the questions. So if you have any deals, send them our way. Okay. Thank you very much, Chuck.
spk07: Okay. Thank you, Bobby. Thank you.
spk06: As there are no further questions, I now hand the conference over to Chuck Peluso for his closing comments. Chuck?
spk02: Thank you. And thank you for the questions. We have formulated a robust business strategy that we believe will drive our growth and ensure sustained and increased profitability over the long term while delivering some maximum value to our shareholders. We're optimistic about our prospects and our efforts and eagerly anticipate realizing the full benefits over time. And we look forward to providing meaningful updates to our shareholders And further, I'd like to thank everyone who joined the call today. Thank you, and have a great day.
spk06: Thank you. The conference of Data Storage Corporation has now concluded. Thank you for your participation. You may now disconnect your lines.
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