Data Storage (DTST) Q3 2024 earnings summary

Executive summary

• Achieved $5.8–$5.81 million in Q3 2024 revenue, a 3% year-over-year decline, reflecting a shift to high-margin recurring subscription revenue over one-time sales.

• Maintained profitability for Q3 and the nine-month period, with net income of $122,000 for Q3 and $235,000 for nine months, despite year-over-year declines.

• Expanded into regulated sectors and international markets, securing major contracts in insurance, healthcare, and education.

• Opened a new Chicago data center, entered the UK market, and integrated Flagship Solutions to enhance global reach and operational efficiency.

• Focused on subscription-based services, cross-selling, and leveraging the merger of CloudFirst Technologies and Flagship Solutions.

Financial highlights

• Q3 2024 revenue: $5.8–$5.81 million (down 3% year-over-year); nine-month revenue: $19.0 million (up 1%).

• Gross profit margin improved to 43.2% in Q3 2024 from 38.9% in Q3 2023; Q3 gross profit was $2.51 million, up 8.7% year-over-year.

• Adjusted EBITDA for Q3 2024 was $515,000, up from $486,000 in Q3 2023; nine-month adjusted EBITDA was $1.4 million.

• Net income for Q3 2024 was $122,000, down from $179,000 in Q3 2023; nine-month net income was $235,000, down from $456,000 year-over-year.

• Ended Q3 2024 with $11.9 million in cash and marketable securities, no long-term debt.

Outlook and guidance

• Baseline recurring revenue for 2025 projected at over $20 million, supported by high renewal rates and contract expansions.

• CloudFirst subsidiary expected to reach $20 million in recurring revenue for 2025, with renewal rates above 90%.

• Continued focus on expanding addressable market in Europe and cross-border companies, targeting over 50,000 potential clients.

• Strategic investments in infrastructure and international expansion are expected to drive future growth.