Data Storage Corporation Reports 28.2% Revenue Growth in Q3 2025 Following Cloud Business Sale

Data Storage Corporation (DSC) reported significant financial developments in its latest 10-Q filing for the third quarter of 2025, reflecting a strategic shift following the sale of its Cloud Solutions Business. For the three months ended September 30, 2025, the company generated revenues of $416,956, marking a 28.2% increase from $325,299 in the same period last year. Gross profit also rose to $198,499, up 37.4% from $144,467, resulting in a gross profit margin improvement to 47.6% from 44.4%. However, the company reported a loss from continuing operations of $1,098,475, compared to a loss of $839,632 in the prior year, primarily due to increased selling, general, and administrative expenses.

In the nine-month period ending September 30, 2025, DSC's revenues reached $1,057,651, a 17.6% increase from $899,135 in the same period of 2024. Gross profit for this period was $477,458, reflecting a 21.0% increase year-over-year. The company reported a loss from continuing operations of $1,313,172, an improvement from a loss of $2,016,109 in the previous year, attributed to a tax benefit recorded in the current period. The company’s total assets increased significantly to $47.7 million as of September 30, 2025, compared to $25.3 million at the end of 2024, largely due to the cash proceeds from the divestiture.

The sale of the Cloud Solutions Business, completed on September 11, 2025, generated net cash proceeds of approximately $38.1 million after transaction costs. This strategic move has allowed DSC to refocus on its Nexxis subsidiary, which provides voice and data telecommunications solutions. The company plans to utilize a substantial portion of the proceeds for a tender offer to repurchase up to 85% of its outstanding shares, expected to commence in the fourth quarter of 2025. Additionally, DSC is evaluating various strategic alternatives for the remaining cash, including potential acquisitions in high-growth technology sectors such as AI and cybersecurity.

Operationally, DSC's customer base has expanded, contributing to increased sales and engagement metrics. The company reported a significant rise in stock-based compensation expenses, primarily due to the accelerated vesting of equity awards related to the divestiture. As of September 30, 2025, DSC had 7,465,306 shares of common stock outstanding, reflecting an increase from 7,045,108 shares at the end of 2024. The company’s working capital also improved to $46.7 million, up from $11.9 million at the end of the previous fiscal year.

Looking ahead, DSC's management remains focused on leveraging its cash reserves for strategic investments and acquisitions while maintaining flexibility to adapt to market conditions. The company has acknowledged a material weakness in its internal controls over financial reporting, particularly concerning the accounting for significant transactions, and is actively working to remediate this issue. The outlook for DSC includes a commitment to maximizing shareholder value while pursuing growth opportunities in complementary technology sectors.