Data Storage Corporation Reports 9.3% Revenue Growth but Net Loss in Q2 2026

Data Storage Corporation (DSC) reported its financial results for the second quarter of 2026, revealing a revenue increase of 9.3% to $358,530 compared to $327,951 in the same period last year. For the first half of 2026, total sales reached $705,237, marking a 10.1% rise from $640,695 in the prior year. The company's gross profit for the quarter was $168,481, up 21.9% from $138,182, resulting in a gross profit margin improvement to 47.0% from 42.1%. However, DSC recorded a net loss of $1,225,060 for the quarter, compared to a loss of $731,963 in the previous year, primarily due to increased selling, general, and administrative expenses, which rose 33.2% to $1,450,551.

The financial performance reflects significant changes following the sale of DSC's Cloud Solutions Business in September 2025, which has shifted the company's focus to its Nexxis subsidiary, providing voice and data telecommunications solutions. The sale resulted in a strategic realignment, and the operating results of the divested business have been classified as discontinued operations. The company is currently exploring potential acquisitions and organic growth initiatives to enhance shareholder value, although no agreements have been finalized.

Operationally, DSC's Nexxis subsidiary has seen growth in customer engagement, with increased spending from existing clients and the addition of new customers contributing to revenue growth. The company reported a gross profit increase of $75,541, or 27.1%, for the first half of 2026, driven by a favorable sales mix and operational efficiencies. However, the total operating expenses for the first half surged by 50.2% to $2,922,664, largely due to a significant rise in stock-based compensation expenses.

As of June 30, 2026, DSC's total assets decreased to $11.1 million from $43.0 million at the end of 2025, primarily due to the sale of marketable securities and the impact of the tender offer completed in January 2026, where the company repurchased 5,625,129 shares of common stock for approximately $29.3 million. The company’s cash position at the end of the quarter was $1.3 million, with working capital reported at $10.3 million, a decrease from $41.8 million at the end of 2025.

Looking ahead, DSC anticipates that its current liquidity, along with expected cash flows, will support operational needs. The company is actively managing expenses and exploring additional sources of liquidity, including potential reductions in selling, general, and administrative expenses. The management remains cautious about macroeconomic conditions and their potential impact on financing availability, while continuing to evaluate strategic opportunities for growth.