Data Storage Corporation’s Nexxis business increased Q2 gross profit by about 22% year over year as revenue from continuing operations rose 9.3%, giving the company a recurring-revenue operating base as it pursues a broader technology acquisition strategy.
Quarterly sales from continuing operations reached approximately $358,500 compared with roughly $328,000 a year earlier. Gross profit increased to approximately $168,500 from $138,200, meaning gross profit expanded considerably faster than revenue during the period.
Nexxis provides recurring telecommunications services including VoIP, internet access, SD-WAN and data transport. Data Storage said the business continues to benefit from demand for reliable enterprise connectivity solutions.
Management sees Nexxis as a stable operating foundation while Data Storage pursues a larger capital-allocation strategy following the sale of its CloudFirst business. The company is actively evaluating investments and acquisitions that could significantly increase its scale and earnings power.
Target businesses are expected to emphasize recurring revenue, predictable cash flows and attractive long-term growth opportunities. Data Storage said it is particularly interested in businesses with established customer relationships, experienced management teams and opportunities for operational and financial expansion.
The company is considering opportunities across AI infrastructure, cybersecurity, communications, enterprise software and other technology sectors. The strategy represents a broader transformation for Data Storage following the CloudFirst divestiture, with management increasingly focused on using its public-company platform and capital resources to acquire additional recurring-revenue businesses.
Data Storage also continues developing strategic initiatives around AI infrastructure. The planned Sovereign AI Solutions business is intended to provide AI continuity infrastructure for regulated industries, with capabilities focused on recovery, resiliency and compliance for sovereign and AI Factory environments.
The company ended the period with approximately $9.3 million across cash, cash equivalents and marketable securities and no long-term debt. Management believes the combination of liquidity, a streamlined corporate structure and a debt-free long-term capital position gives Data Storage flexibility to act when attractive acquisition opportunities emerge.
Data Storage also highlighted its successful tender offer as part of its recent capital-allocation activity. Going forward, the company plans to balance maintaining Nexxis as a recurring-revenue operating platform with deploying capital into technology businesses capable of adding sustainable earnings and longer-term growth.
KEY QUOTES:
“The second quarter marked another step forward in our transformation following the successful sale of our CloudFirst business. While Nexxis continued to generate recurring telecommunications revenue and delivered year-over-year growth in both revenue and gross profit, the most important work taking place today is the execution of our long-term capital allocation strategy.”
“At the same time, Nexxis continues to perform well as a stable operating business, reflecting continued demand for reliable enterprise connectivity solutions. We believe this recurring revenue business provides an attractive operating foundation while we pursue acquisition opportunities that have the potential to significantly expand our scale and earnings power.”
“With approximately $9.3 million in cash and cash equivalents and marketable securities, no long-term debt and the flexibility provided by our streamlined corporate structure, we believe we are well positioned to act when attractive opportunities arise. Our focus remains on disciplined execution, prudent capital allocation and building long-term value for our shareholders.”
Chuck Piluso, Chief Executive Officer of Data Storage Corporation
