Revenue hits record high in 2023
Achieves net profit following hefty loss in 2022
Liquidity improves to further shake off dilution fears
(The following EcoShares article is a trial of wider equity coverage)
Data Storage (NSDQ: DTST) was founded in 2001 and provides multi-cloud technology solutions primarily in the US. The company offers data protection and disaster recovery solutions, such as data vaulting, retention, standby servers, maintenance, and internet solutions.
The company caught our attention after it reported profitable quarters during 2023 and a multitude of undisclosed long-term multi-million deals with high-tier corporations. Given the firm operates in the technology and cloud computing sectors, paired with having a micro-cap valuation, it could perform well within this rapidly growing sector.
Data Storage's significantly higher total asset levels compared to its liabilities suggest major space to extend debt if they wished to inject fast-capital for company growth. The public company is currently valued at $40mn as of 6 April 2024.
The below is an example of one of their recent multi-million deals, although Data Storage kept various details undisclosed, which could be for legal reasons.
Assuming these are multi-million to multi-billion firms, you can only imagine more and more corporations will begin to take notice. If a hurricane wipes out severs or a data centre, which is constantly affecting more and more US states as climate change worsens, having such recovery platforms makes full rational sense - so the business model is clearly strong (in our humble opinion).
The cloud recovery firm posted revenue of $25mn for 2023, which was an increase of 4.6% from the prior year. This latest year was also profitable, receiving a small profit of $299,316. When considering that Data Storage made a loss of ($4.4mn) in 2022, the company has clearly bounced back quickly. The net margin for 2023 was 1.2%, with plenty of room for growth.
One factor to keep an eye on is Data Storage's cash decline, where its cash and cash equivalents fell by $857,992 for 2023. However, this compares to a much steeper loss of ($9.9mn) in 2022, with management showing promising signs of turnings things around.
Investors ideally want to see cash levels rising, although the firm could comfortably raise debt given the promising shifts seen in their balance sheet.
While their total assets did decline slightly for 2023 by 0.9% to $23.9mn compared to the previous year, total liabilities fell steeply by 31% to $3.6mn during the same timeframe.
This meant Data Storage's liquidity (current ratio) going into 2024 was 6.7, improving compared to the liquidity of 4.7 at the same point last year. A current ratio is still considered acceptable at 2, which demonstrates the comfortable position the firm is in from an asset-to-liability perspective.
As always, this article doesn't mean that Data Storage will perform well in the foreseeable future. Please always seek professional financial advice when considering an investment. Data Storage is expected to release its Q1 2024 financial report on 13 May 2024. You can find a full copy of Data Storage's 2023 financial report by clicking this hyperlink.