Data Storage (DTST) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $4.91 million, down 17% year-over-year due to fewer one-time equipment/software sales, but recurring revenue and cloud services remained strong.

• Six-month sales reached $13.15 million, up 3% year-over-year, driven by a 29% increase in infrastructure and disaster recovery/cloud services.

• Gross profit margin improved to 49% in Q2 2024 from 43.7% in Q2 2023, reflecting operational efficiency and business model scalability.

• Completed the merger of CloudFirst Technologies and Flagship Solutions, expanded headquarters in Melville, NY, opened a London office, and deployed assets at a new Chicago data center.

• Serving over 480 companies, with a nurture list of 1,000+ organizations and a renewal rate above 90%.

Financial highlights

• Q2 2024 net loss attributable to common shareholders was $244,000, compared to net income of $226,823 in Q2 2023; six-month net income was $113,000, down from $277,000.

• Adjusted EBITDA for Q2 2024 was $164,000, down from $350,000 in Q2 2023; six-month adjusted EBITDA was $837,000, slightly down from $865,000.

• Cash and marketable securities at June 30, 2024, totaled approximately $12 million, with working capital of $11.2 million and no long-term debt.

• Cost of sales for Q2 2024 was $2.5 million, down 25% year-over-year; six-month cost of sales was $7.8 million, down 4%.

• SG&A expenses for Q2 2024 were $2.8 million, up 13% year-over-year; six-month SG&A was $5.5 million, up 21%.

Outlook and guidance

• Management expects continued positive EBITDA performance and is investing in growth, including international expansion and new data center deployments.

• Strategic growth plan targets market penetration in the US, UK, and Canada, with equipment deployment in the UK expected in Q4 2024 and go-live in January.

• Actively recruiting sales talent and expanding both direct and channel sales networks to drive growth.