Data Storage Corp's Q2 2025: Unpacking Contradictions in European Expansion and Cloud Revenue Strategy

European expansion and revenue expectations, cloud revenue and growth strategy, sales and revenue expectations post-CloudFirst sale, expansion into Europe, and cloud revenue and pipeline visibility are the key contradictions discussed in Data Storage Corporation's latest 2025Q2 earnings call.



Subscription-Based Business Growth:
- Data Storage Corporation's total sales for the 3 months ended June 30, 2025, were $5.1 million, an increase of approximately $236,000 or 4.8% compared to the same period in 2024.
- The growth was primarily driven by increased sales from subscription-based services, particularly in cloud infrastructure, disaster recovery, and Nexxis.

Cloud Infrastructure and Disaster Recovery Revenue Increase:
- Cloud infrastructure and disaster recovery revenue increased by approximately $193,000 or 6.1% due to new subscription clients and expanded services for existing clients.
- This growth was driven by strong sales initiatives and customer demand for scalable and secure cloud-based solutions.

European Expansion and Costs:
- The company's European expansion led to an increase in selling, general and administrative expenses by approximately $536,000 or 19.2% in the 3 months ended June 30, 2025.
- The expenses were primarily due to increased headcount and salaries to support growth initiatives, as well as noncash stock-based compensation.

Proposed Sale of CloudFirst Technologies:
- Data Storage Corporation is proposing the sale of CloudFirst Technologies at a premium of $40 million to its entire market cap, with approximately $24 million in net proceeds.
- The proposed sale aims to unlock the hidden value of CloudFirst and return capital to shareholders, while investing in growth opportunities in AI, cybersecurity, and SaaS.