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NEW YORK - Data Storage Corporation (NASDAQ:DTST), a technology company with a current market capitalization of $24.13 million and strong balance sheet metrics according to InvestingPro data, announced Tuesday it has entered into a definitive agreement to sell its wholly owned subsidiary, CloudFirst Technologies Corporation, to cloud provider Performive, which is backed by private equity firm Renovus Capital Partners.
The transaction, announced on July 11, requires approval from Data Storage shareholders at the company’s annual meeting scheduled for September 10, 2025. If approved, CloudFirst will continue operating under its established brand with its current leadership and support teams intact. The company currently maintains a healthy financial position with a current ratio of 3.52 and more cash than debt on its balance sheet.
Data Storage plans to retain its public listing and continue operating its telecommunications subsidiary, Nexxis Inc. The company intends to use proceeds from the sale, along with existing cash, to repurchase up to 85% of its outstanding shares through a tender offer.
Following the share repurchase, Data Storage plans to pursue strategic acquisitions in sectors including AI-enabled SaaS, cybersecurity, and healthcare automation with its remaining funds.
"This agreement highlights the long-term value CloudFirst has created and reflects confidence in the future," said Chuck Piluso, CEO of Data Storage Corporation, in a press release statement. "Although we believe in the strong fundamentals and long-term potential of CloudFirst, we believe that the public markets did not adequately reflect its value." This assessment aligns with InvestingPro analysis, which indicates the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report covering this and 1,400+ other US equities.
The company expects business continuity throughout the approval process, noting that CloudFirst has added staff over the past 30 days.
In other recent news, Data Storage Corporation reported its Q1 2025 financial results, revealing a decline in revenue and earnings per share (EPS), both of which fell short of analyst expectations. The company posted an EPS of $0.10, missing the forecasted $0.11, and revenue for the quarter was $8.08 million, below the anticipated $8.4 million. This marks a 2% decrease in revenue compared to the same period last year. Data Storage Corp is also focusing on expanding its operations in the UK, with expectations of generating its first revenue from this expansion in Q4 2025. The strategic focus remains on high-margin recurring cloud revenue and infrastructure expansion. Despite these challenges, the company remains debt-free and holds $11.1 million in cash and marketable securities. Analysts from firms like Maxim Group have raised questions about the company’s European market expansion and contract renewal strategies. The leadership has acknowledged concerns about stock valuation but emphasized the core business’s strength and long-term growth potential.
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