Data Storage 2025 Q2 Earnings Widening Losses Despite Revenue Growth

Data Storage (DTST) reported its fiscal 2025 Q2 earnings on August 15, 2025, with revenue up 4.8% year-over-year but deeper net losses, raising concerns over profitability. The company’s performance fell short of positive expectations, with no guidance provided and no earnings per share improvement. Despite the revenue gain, the expanding loss per share highlighted ongoing operational challenges.

Revenue

Data Storage’s total revenue rose to $5.15 million in the second quarter of 2025, reflecting a 4.8% increase from $4.91 million in the same period a year ago. The company’s core Cloud Infrastructure & Disaster Recovery segment remained the largest contributor, posting $3.36 million in revenue. Equipment and Software added $687,321, while Managed Services accounted for $738,860. Nexxis VoIP Services generated $323,620, and the Other category brought in $38,180, completing the revenue breakdown.

Earnings/Net Income

Data Storage’s losses deepened in Q2 2025, with net income turning negative at $-731,963 compared to a $-246,605 loss in the prior-year period. This represents a 196.8% year-over-year increase in net loss. On a per-share basis, the loss widened to $0.10 from $0.04, an increase of 150.0%. The earnings performance was clearly a negative outcome, indicating deteriorating profitability.

Price Action

Data Storage’s stock price has been mixed in the near term. On the latest trading day, shares fell 0.22%, and the stock declined 3.41% during the most recent full trading week. However, the month-to-date performance has been positive, with a 34.02% gain. This suggests some investor optimism, despite the recent quarterly results.

Post-Earnings Price Action Review

The strategy of purchasing Data Storage shares following a quarterly revenue increase and holding for 30 days has historically delivered significant returns. Over the past three years, the strategy generated a 257.89% return, far outperforming the benchmark’s 47.29% return. This 210.59% excess return underscores the potential gains from buying DTST after earnings reports that show revenue growth. The compound annual growth rate (CAGR) was 55.20%, highlighting strong long-term potential. However, the strategy was associated with higher volatility, including a maximum drawdown of 71.83% and a Sharpe ratio of 0.77, indicating substantial risk.

CEO Commentary

Chuck Piluso, CEO of Data Storage, emphasized the company’s dual strategic paths, whether the CloudFirst sale is approved or not. He described the potential transaction as “transformative,” stating it would unlock hidden value and facilitate a tender offer to repurchase up to 85% of outstanding shares, with 15% reserved for reinvestment in innovation. Piluso underscored the company’s commitment to AI, cybersecurity, and SaaS growth initiatives. He also expressed confidence in CloudFirst’s performance and the company’s ongoing ability to optimize operations while expanding into new markets. Piluso’s remarks conveyed a tone of transformation and disciplined capital allocation, signaling a forward-looking strategy aimed at long-term value creation.

Guidance

The CEO did not provide specific quantitative guidance for future financial performance. However, he outlined strategic intentions, including the possibility of returning capital to shareholders via a tender offer if the CloudFirst sale is approved. The company plans to retain 15% of proceeds for reinvestment in innovation and acquisitions. Piluso also highlighted ongoing pipeline visibility, noting approximately $10 million in cloud opportunities and a 3:1 ratio of add-ons to new sales, expressing confidence in capturing continued enterprise demand.

Additional News

On August 15, 2025, Punch Newspapers reported a range of Nigerian news. Notably, a lawyer filed a N500 billion lawsuit against the Federal Government, NCAA, and others over alleged special treatment for a private university. Meanwhile, the EFCC arrested a Kaduna estate agent for land fraud, and Rivers State announced plans to establish an emergency management agency. The Nigerian Bureau of Statistics also reported a slight decline in the inflation rate to 21.88% in July. These developments highlight ongoing economic and legal activities in Nigeria.