Data Storage (US:DTST)2023-05-15 16:53Financial Data and Key Metrics Changes - Net income attributable to common shareholders for Q1 2023 was $50,666, a decrease from $156,010 in Q1 2022 [7] - Total revenue for Q1 2023 was $6.9 million, down by $1.8 million or 21% compared to $8.7 million in Q1 2022, primarily due to a decrease in equipment sales [20] - Selling, general and administrative expenses decreased by 13% from $2.5 million in Q1 2022 to $2.1 million in Q1 2023 [25][31] - Adjusted EBITDA for Q1 2023 was $334,000, down from $604,492 in the same period last year [31] Business Line Data and Key Metrics Changes - The company reported a 14% increase in revenues when excluding a $2.6 million equipment sale to an NFL team in Q1 2022 [29] - Executed subscription revenue contracts totaled over $5.5 million in total contract value [18] - The company is focusing on increasing gross profit margins in recurring services closer to 50% [12] Market Data and Key Metrics Changes - The global addressable market for the company's solutions is estimated at roughly $36 billion in annual recurring revenue, with an average contract term of about 29 months and a 94% renewal rate [30] - CloudFirst had over 16,000 website visitors from the beginning of the year through April, indicating strong interest in its services [13] Company Strategy and Development Direction - The company aims to achieve a $50 million high-margin revenue run rate in the coming years through strong organic growth and strategic acquisitions [24] - The focus is on recurring revenue through long-term subscription-based contracts, which provide high-margin revenue streams [5] - The company is actively exploring synergistic acquisitions to enhance operations and improve gross profit margins [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to leverage its established customer base and proven track record to drive growth [6] - The company is positioned as a leader in a market with limited competition and is focused on efficiently deploying capital for measurable returns [18] - Management highlighted the importance of maintaining a solid balance sheet and reducing redundant expenses to support sustainable profitability [64] Other Important Information - The company ended Q1 2023 with approximately $11 million in cash and short-term investments, compared to $11.3 million at the end of Q4 2022 [7] - The company is looking to expand its international footprint through strategic partnerships and acquisitions [19] Q&A Session Summary Question: Can you provide details on the Fortune 2000 deal announced recently? - The deal was a software sale valued at $2.2 million, expanding from a previous $1.9 million contract [51][52] Question: What is the status of the sales team expansion? - The company has hired two new sales representatives and is actively recruiting more qualified candidates [34] Question: Can you discuss the M&A pipeline and potential targets? - The company is focusing on acquiring managed service providers with revenues over $15 million and is looking internationally for growth opportunities [35][37] Question: What is the current state of the new business pipeline and close rates? - The total contract value in the pipeline exceeds $12 million, with close rates estimated at around 80% for Flagship and approximately 23% for CloudFirst [55][61]