Data Storage Corporation (NASDAQ: DTST) reported second-quarter 2026 financial results, marking a strategic shift following the sale of its CloudFirst business in September 2025. The company’s ongoing financial reporting now reflects only its continuing operations, specifically the Nexus subsidiary. Revenue from these operations increased 9.3% year-over-year to $359,000, up from $328,000 in the prior-year period, driven by new customer additions and expanded spending within its voice and data solutions portfolio.

Despite the revenue growth, the company reported a net loss of $1.2 million for the quarter, widening from a $732,000 loss in the same period last year. This deterioration in profitability was attributed to a 33.2% rise in selling, general, and administrative expenses to $1.5 million. The expense increase was primarily driven by a $328,000 jump in non-cash stock-based compensation and higher professional fees related to legal and consulting services.

Financial Performance

Gross profit for the three months ended June 30, 2026, reached $168,000, an increase of 21.9% from $138,000 in the prior year. This improvement was accompanied by an expansion in gross profit margin to 47% from 42.1%, reflecting favorable sales mix and operating leverage within the Nexus business.

The divergence between the robust gross margin expansion and the widening net loss highlights the impact of fixed overheads and non-cash charges during this transition period. While operating leverage benefited gross margins, the absolute increase in SG&A expenses outpaced the growth in gross profit, resulting in a larger bottom-line deficit.

Strategic Outlook and Balance Sheet

Data Storage ended the quarter with approximately $9.3 million in cash and marketable securities and no long-term debt. Management emphasized that this capital position provides flexibility for disciplined deployment, including selective acquisitions aimed at building sustainable recurring revenue.

Chairman and CEO Chuck Peluso outlined three key takeaways from the quarter:

• Nexus Performance: The subsidiary continues to deliver year-over-year growth in both revenue and gross profit, serving as a stable recurring revenue base.
• Balance Sheet Strength: The debt-free structure and available capital allow for strategic optionality without pressure to execute transactions prematurely.
• Active M&A Pipeline: The company is evaluating opportunities in AI infrastructure, cybersecurity, and communications software. Management targets signing a non-binding letter of intent within 60 days and aims to close a deal by the end of Q4 or Q1 of the next fiscal year.

Peluso noted that the company remains patient and valuation-conscious, avoiding deals that do not meet strict strategic and financial criteria. The focus remains on acquiring businesses with strong management teams, predictable cash flows, and synergistic potential with DTST’s existing platform.

Data Storage Corporation (NASDAQ: DTST) will host a business update conference call on August 14, 2026, at 11:00 a.m. Eastern Time to discuss its financial results for the second quarter of 2026, which ended June 30, 2026. The call aims to provide investors with clarity on the company’s recent performance and outline future strategic directions, particularly regarding investments in GPU infrastructure and AI-driven software applications.

The conference call serves as the primary mechanism for disclosing these quarterly findings. Management will address corporate progress and other material developments alongside the financial review. The event is accessible via telephone for U.S. callers at 877-407-9219 and international callers at +1-412-652-1274. A live webcast is available through the company’s designated event portal and its News & Events section at www.dtst.com/news-events .

Strategic Focus and Operations

Through its subsidiary Nexxis, Inc., Data Storage Corporation provides Voice over Internet Protocol (VoIP) and Unified Communications services, along with dedicated internet connectivity. These offerings form part of the company’s one-stop solution set. Looking ahead, management indicated plans to invest in and support businesses beyond traditional telecommunications, specifically targeting GPU infrastructure, AI-driven software applications, cybersecurity, and voice/data telecommunications. The overarching mission remains building sustainable, recurring revenue streams while maintaining financial discipline and strategic focus.

Access and Replay Details

Investors unable to attend the live broadcast can access recordings through multiple channels. A webcast replay will remain available on the company’s website through February 14, 2027. For those preferring audio-only access, a telephone replay will be available approximately three hours after the call concludes, accessible until August 21, 2026.

Regulatory Disclosures

The press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and involve risks and uncertainties that could cause actual results to differ materially from those projected. Detailed risk factors are outlined in the company’s filings with the Securities and Exchange Commission. Data Storage Corporation undertakes no obligation to update these forward-looking statements except as required by law.

What the Numbers Show

While specific financial metrics for Q2FY26 were not disclosed in this scheduling notice, the emphasis on GPU infrastructure and AI-driven software signals a strategic pivot toward high-growth technology sectors. This diversification away from traditional VoIP services suggests management is seeking to mitigate reliance on legacy telecommunications revenue streams by capitalizing on emerging demand for computational power and artificial intelligence solutions.