Data Storage Corporation

Greetings and welcome to the Data Storage Corporation first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Alexandra Schultz, Investor Relations for Data Storage Corporation. Thank you. You may begin.

Thank you. Good morning, everyone, and welcome to Data Storage Corporation's 2025 First Quarter 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 its 2025 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 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 believes, expects, anticipates, intends, projects, 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 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 the other cautionary statements included in the company's annual report for the year ended December 31st, 2024, quarterly reports on Form 10-Q and current reports on Form 8-K filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as 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 a result of new information, future events, change the circumstances or otherwise. I'd now like to turn the call over to Chuck Peluso. Please go ahead, Chuck.

Thank you, Allie. Good morning, everyone, and thank you for joining us on today's call to review our first quarter 2025 results. We appreciate the opportunity to update you on our progress. Before diving into our operational highlights, let me briefly touch on our first quarter financial performance. Revenue was $8.1 million, with our core cloud infrastructure and disaster recovery services growing 14% year over year. We delivered $2.86 million in gross profit, maintaining margin stability. Adjusted EBITDA came in at $497,000, reflecting our ongoing focus on operational efficiency even as we make targeted investments such as Cloud First Europe. Finally, we closed the quarter with $11.1 million in cash and marketable securities, and we remain debt-free, a position we believe is critical as we explore future growth opportunities and strategic alternatives. I will now shift over to what we've built and how our strategy is enabling us to scale faster and smarter. At Data Storage Corporation, our mission is to support enterprises and institutions with cloud infrastructure, disaster recovery, and business continuity solutions that are mission critical in nature. This includes protecting core business systems, ensuring regulatory compliance, and enabling operational resilience in an increasingly complex IT environment. Our operating platform Cloud First Technologies is purpose-built for reliability, scalability, and security, particularly for IBM power systems. These workloads remain prevalent in financial services, healthcare, manufacturing, and public sector organizations, sectors where performance and uptime are non-negotiable. Cloud First is optimized to meet these specialized needs. And as the migration is underway and these industries and companies look towards cloud-based solutions, the uniqueness of our offering rooted in deep IBM Power Infrastructure expertise sets us apart. We are not chasing commodity cloud workloads. We are delivering enterprise-grade hosting, backup, recovery to clients with rigorous infrastructure requirements, many of whom operate under regulatory oversight. It's a deliberate model. We've built our value proposition around long-term infrastructure partnerships. That foundation is increasingly attractive as clients prioritize resilience, compliance, and predictability. A key part of this momentum is our expanding infrastructure footprint and partner ecosystem in the UK through Cloud First Europe. Over the past several months, we've formed strategic relationships that significantly extend our capabilities in the region. In November, we partnered with BrightSolid, a trusted data center operator in Scotland with Tier 3 facilities. This partnership gives us secure, high-availability infrastructure in the region and enables Cloud First to serve regulated clients in Scotland and Northern England with enterprise-grade redundancy and performance. In January, we expanded our relationship with Megaport into the UK, enabling private cloud connectivity via their Direct Connect platform. positioning us to provide direct, secure, high-speed access to AWS, Azure, and Google Cloud without traversing the public internet. This improves performance, enhances security, and enables seamless hybrid cloud deployment. Later in January, we launched a partnership with Pulsent, the most geographically diverse edge data center provider in the UK. Through this relationship, Cloud First now operates across multiple edge locations throughout the country, embedding our IBM power-based infrastructure directly into Polson's footprint. This accelerates our time to market and introduces us to new enterprises that are ready or within the Polson ecosystem. These partnerships are highly strategic, They allow us to meet clients where they are geographically, operationally, and technologically while offering the flexibility, compliance assurance, and performance they expect. Each relationship is built to support long-term delivery, deep integration, and scalable growth. While we are encouraged by the ongoing performance of our business and overall financial position, we must acknowledge a disconnect between our operating fundamentals and our current equity valuation. Our stock price does not, in our view, reflect the value of the business, particularly the recurring nature of our cloud infrastructure revenues, our high retention rate, and our differentiated platform. We will continue to seek ways to unlock value for our shareholders. As we look ahead to the remainder of 2025 and beyond, I want to take a moment to reflect on how far we've come and where we're headed. Through a combination of targeted geographic expansion and a clear focus on our core strengths, we have laid the groundwork to become a global leader in cloud infrastructure services. Today, we are proud to stand as one of the very few global single source providers of both disaster recovery and multi-cloud hosting solutions, including integration with AWS, Microsoft Azure, and Google Cloud. This is particularly true of our IBM Power Platform, where we continue to lead with unmatched specialization and performance. Our ability to support IBMI and AIX workloads gives us a valuable market advantage and a distinct competitive edge, especially as enterprise look to modernize our infrastructure without compromising legacy reliability. Our differentiation here is not incidental. It's intentional. It's built on decades of expertise, long-term client relationships, the proven ability to deliver. As we move forward, our priorities are clear. Grow our high margin recurring cloud-first revenue, expand our global infrastructure, expand our partnership ecosystem, maintain a strong financial footing to support scalable operations, and continue to evaluate paths that will enhance long-term shareholder value. We are now operating across 10 global data centers, serving over 400 clients and managing over 600 contracts. We are proud of what our team has accomplished operationally and financially, and remain confident in our staff and our platform. While we operate in a complex and evolving IT environment, our core value proposition remains clear and relevant, ensuring continuity, security, and performance for mission-critical systems while delivering a high level of client satisfaction. With that, I'd like to turn the call over to Chris Panagiotakos, our CFO, to discuss our financials. Please go ahead, Chris. Thank you, Chuck.