Data Storage Corp to Sell CloudFirst to Performive for Growth

Data Storage Corporation is selling the assets of its subsidiary, CloudFirst Technologies Corporation, to Performive in a strategic growth transaction. The deal is subject to shareholder approval at the company's annual meeting on September 10, 2025. CloudFirst will continue to accelerate its growth under new ownership, while Data Storage Corporation explores opportunities to enhance shareholder value.

Data Storage Corporation (DTST) has entered into a definitive agreement to sell its wholly owned subsidiary, CloudFirst Technologies Corporation, to cloud provider Performive. The transaction, which is subject to shareholder approval, aims to enhance growth and shareholder value for both companies. The deal is set to be voted on at Data Storage's annual meeting on September 10, 2025.

Under the terms of the agreement, CloudFirst will join Performive, a cloud and infrastructure services provider backed by private equity firm Renovus Capital Partners. The acquisition is expected to accelerate CloudFirst's growth under new ownership while preserving its established brand and leadership structure. CloudFirst's current leadership and support teams will remain in place, ensuring continuity in its operations.

Data Storage Corporation plans to use the proceeds from the sale, along with existing cash, to repurchase up to 85% of its outstanding shares through a tender offer. The company also intends to pursue strategic acquisitions in sectors including AI-enabled SaaS, cybersecurity, and healthcare automation with its remaining funds. This strategic move allows Data Storage to explore high-growth opportunities and enhance its long-term growth prospects.

The transaction is designed to return value to shareholders while ensuring continuity in CloudFirst's operations. However, the pending sale and reliance on shareholder approval create uncertainty for the company's future operations and strategic direction. The company's statement about public markets not adequately reflecting CloudFirst's value may signal underlying issues with investor perception and trust in the organization's valuation strategy.

In other recent news, Data Storage Corporation reported its Q1 2025 financial results, revealing a decline in revenue and earnings per share (EPS), both of which fell short of analyst expectations. The company posted an EPS of $0.10, missing the forecasted $0.11, and revenue for the quarter was $8.08 million, below the anticipated $8.4 million. This marks a 2% decrease in revenue compared to the same period last year. Despite these challenges, the company remains debt-free and holds $11.1 million in cash and marketable securities.

The company expects business continuity throughout the approval process, noting that CloudFirst has added staff over the past 30 days. Data Storage is also focusing on expanding its operations in the UK, with expectations of generating its first revenue from this expansion in Q4 2025. The strategic focus remains on high-margin recurring cloud revenue and infrastructure expansion.

References:
[1] https://www.investing.com/news/company-news/data-storage-to-sell-cloudfirst-subsidiary-plans-share-buyback-93CH-4136647
[2] https://www.quiverquant.com/news/Data+Storage+Corporation+Announces+Definitive+Agreement+to+Sell+CloudFirst+Technologies+Corporation+to+Performive