Good evening, and welcome to the Data Storage Corporation fiscal year 2024 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to your host, Alexandra Schilt, Vice President of Crescendo Communications, the company's investor relations firm. Thank you, Ms. Schilt. You may begin. Thank you. Good morning, everyone, and welcome to Data Storage Corporation's 2024 fiscal year business update conference call. On the call with us this morning are Chuck Piluso, Chairman and Chief Executive Officer, and Chris Panagiotakos, Chief Financial Officer. The company issued a press release this morning containing its 2024 fiscal year financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at (212) 671-1020. Before we begin, I'd like to remind listeners that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are intended to be covered by the safe harbor created thereby. Forward-looking statements are subject to risks and uncertainties that could cause actual results, performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by, or that otherwise include the words believes, expects, anticipates, intends, projects, estimates, plans, or similar expressions or future or conditional verbs such as will, should, would, may, and could are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Although the company believes that these expectations reflected in such forward-looking statements are reasonable, it can provide no assurance that such expectations will prove to have been correct. Important factors that could cause the actual results to differ materially from the company's expectations include but are not limited to the company's ability to benefit from the IBM cloud migration underway, the company's ability to position itself for future profitability, and the company's ability to maintain its NASDAQ listing. These risks should not be construed as exhaustive and should be read together with other cautionary statements included in the company's annual report for the year ended 31 December 2024, quarterly reports on Form 10-Q, and current reports on Form 10-K filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it was initially made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances, or otherwise. I'd now like to turn the call over to Chuck Piluso. Please go ahead, Chuck. Thank you, Ali. Good morning, everyone. We have made considerable progress throughout 2024, both in terms of financial performance and strategic execution. Through a combination of targeted geographic expansion and a clear focus on our core strengths, we have laid the groundwork to become a global leader in cloud infrastructure services. Today, we're one of the few global single-source providers of disaster recovery and cloud hosting with multi-cloud solutions. This is especially true in our IBM Power Platform, where our specialization continues to offer valuable marketing and a competitive edge. Before we discuss the developments that we believe are building shareholder value as well as Cloud First long-term direction, I'd like to begin with a brief overview of our financial performance for the 2024 fiscal year. Total revenue for the year grew to $25.4 million, up 2% from $25 million in 2023. While this top-line growth is modest, it reflects deliberate transition away from low-margin, one-time projects towards more predictable, subscription-based, recurring revenue under long-term agreements. Our cloud infrastructure and disaster recovery service business segment delivered strong momentum, with revenue climbing 27% year -over -year to $12.3 million. These services made up 51% of total revenue, demonstrating the growing importance of our recurring cloud offering to our overall business. We ended the year with annual recurring revenue run rate of $21.5 million, a clear indicator that our business is becoming more subscription-based, stable, and scalable. Net income improved significantly to $513,000, up nearly 71% from $299,000 in 2023. This reflects both margin expansion and a more efficient core structure. Our adjusted EBITDA also showed strong growth, reaching $2.37 million compared to $1.64 million last year. This captures our ability to scale the business while maintaining profitability, a key component in our long-term strategy. Our balance sheet remains healthy, with $12.3 million in cash and marketable securities and no debt. This provides both operational flexibility and the capacity to invest in future growth. As expected, we experienced a decline in one-time hardware and a slight decrease in managed service revenue, a shift that is aligned with our strategy to prioritize sustainable recurring revenue streams. Looking beyond 2024, our five-year organic growth further illustrates the strength and resilience of our cloud business. Between the first quarter of 2020 and the first quarter of 2025, CloudFirst achieved revenue expansion, driven primarily by our subscription-based cloud disaster recovery and hosting services. Over this period, the total quarterly nearly doubled, increasing from $1.86 million in Q1 2020 to $3.54 million in Q1 of 2025, representing a compounded annual growth rate of 18% for CloudFirst organic growth. If we include the merger of Flagship with CloudFirst, it is a compounded annual growth rate of 30%. In parallel, we also observed steady growth across all services. Cybersecurity subscription and management expanded. Enterprise clients responded to evolving risk. Software renewals and Office 365 contributed incremental recurring revenue. Efforts to cross-sell and upsell our clients are underway. This performance reinforces the durability of our recurring model and our ability to expand client value through a broader portfolio of integrated solutions. It also speaks to customer retention, long-term contracts, and increasing reliance on our infrastructure, all of which laid the groundwork for continued organic growth and client acquisition. Now I'd like to turn over to the developments that are setting the foundation for our future growth. One of the most significant milestones of the year was our international expansion into the UK We officially launched CloudFirst Europe Limited. This move established a regional presence and a long-term growth platform to serve a broader European market. We supported this expansion through key partnerships with Brightsolid in Scotland and Pulsant in England. We enabled the successful deployment of three Tier III data centers in the UK These facilities allow us to deliver our cloud platform and disaster recovery solutions within the UK borders in full compliance with strict regulatory requirements. This capability represents a powerful differentiator. Very few companies can provide an IBM Power Cloud platform with migration services and support across the US, Canada, and the UK with consistent enterprise grade-level service levels and regional compliance. To lead this new market, we appointed Carl Friedman as Managing Director of CloudFirst Europe. Carl brings deep industry knowledge and leadership experience, and under his guidance, we are expecting some great things. In addition to our geographic expansion, we also executed structural milestones, the merger of Flagship and CloudFirst, in January of 2024. This integration enhances our internal efficiency, consolidates technical capabilities, and creates a stronger go-to-market engine. By unifying our teams and solutions, we are now better positioned to cross-sell cloud and managed services across both legacy and new client accounts. Today, we serve over 500 clients across a wide range of industries, and the operational synergies are already evident, translating into measurable improvements in client engagement and service delivery, as well as revenue growth. 2024 is also a year in which the market increasingly recognized our value proposition, particularly sectors with complex compliance and security requirements. Some examples of client engagements include a six-figure cloud infrastructure deal with the Canadian division of a leading Japanese motorsport manufacturer, addressing complex hosting and security needs. An expanded engagement with a billion-dollar insurance company, adding new cybersecurity infrastructure services to an existing relationship, a strong vote of confidence in both our capabilities and partnership model. A contract with a major US medical center provider, a HIPAA-compliant cloud solution, further strengthening our presence in the healthcare sector. These contracts are more than just revenue wins. They reflect our ability to deliver mission-critical solutions to organizations with stringent compliance and performance requirements. To support our growing client base, we continue to invest in platform expansion. In the US, we added a new Tier III data center in Chicago, boosting performance for clients in the Midwest and adding redundancy to our North American Network. With this addition, our global infrastructure footprint now spans 10 data centers. This provides the high availability, geographic diversity, and performance optimization required by enterprises, particularly those with multi-site, cross-border operations. We also observed strong growth in market awareness. In 2024, our CloudFirst website attracted over 84,000 unique visitors, signaling rising interest in IBM Power Cloud migration, continuity services, and hybrid infrastructure solutions. We have also built a sales lead funnel, and our nurture list includes thousands of organizations, many with multi-location operations and complex compliance needs. With an estimated total addressable market in Europe and cross-border, IBM organizations exceed 50,000 companies. Overall, 2024 was a year of execution, as the results speak for themselves. We grew our recurring cloud business, improved our bottom line, expanded internationally, and integrated our operations to better serve a global market. As we enter 2025, a strong financial foundation, a high-retention recurring revenue model, an international cloud platform, and a clear strategy to capitalize on the growing demand, particularly in regulated and global enterprise markets. Selling, general, and administrative expenses for the year ended 31 December 2024, were $11 million, an increase of $1.4 million, or 13%, as compared to $9.7 million for the year December 31. The increase was primarily due to an increase in professional fees, stock-based salaries, and travel. The adjusted EBITDA for the year for 31 December 2024, was $2.4 million, compared to the adjusted EBITDA of $1.6 million for the year ended December 31. Chris, I'm going to send it back to you, okay? Thank you, Chuck. Good morning, everyone. Total revenue for the year ended 31 December 2024, was $25.4 million, an increase of approximately 2% compared to $25 million for the year ended 31 December 2023. The increase is primarily attributed to an increase in our cloud infrastructure and disaster recovery services, as well as our VoIP services during the year. Cost of sales for the year ended 31 December 2024, was $14.3 million, a decrease of $1.1 million, or 7%, compared to $15.4 million for the year ended 31 December 2023. The decrease was mostly related to the decrease in one-time equipment and managed services related cost of sales. Selling, general and administrative expenses for the year ended 31 December 2024, were $11 million, an increase of $1.3 million, or 13%, as compared to $9.7 million for the year ended 31 December 2023. The increases were primarily due to an increase in professional fees, stock-based compensation, salaries, and travel as a result of our international expansion efforts. Adjusted EBITDA for the year ended 31 December 2024, was $2.4 million, compared to adjusted EBITDA of $1.6 million for the year ended 31 December 2023. Net income attributable to common shareholders for the year ended 31 December 2024, was $523,000, compared to net income of $382,000 for the year ended 31 December 2023. We ended the year with cash and marketable securities of approximately $12.3 million at 31 December 2024, compared to $12.75 million at 31 December 2023. Thank you, and I will now turn the call back to Chuck. Thanks, Chris. With all that said, and personally speaking, we remained undervalued. We continue to investigate how we can uncover shareholder value, communicating the value in what we have built, the talent, and our employees, our partners, and our solid financial position. With that all said, I'd like to turn this over to Q&A if we have any questions. Thank you. At this time, we'll conduct our Q&A session. To ask a question, press Star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. Once again, to ask a question, press Star one on your telephone keypad. Our first question comes from Matthew Galinko with Maxim. Please state your question. Hey, good morning. Thanks for taking my question and congrats on the strong year. Maybe can we start off with kind of what you're kind of how we should be thinking about spending plans for 2025? Should we expect OpEx to trend upward on the SG&A side of things? Do we expect CapEx? Just kind of some sense of how you guys are looking at this year. Thanks, Matt. I'll cover some of that. I can turn it over to Chris just for what went on with CapEx for 2024. Right now, we've invested how much money, Chris, into the UK on CapEx? It was approximately $575,000 in 2024. What we're expecting is that we expect the UK to be fine right now with what's installed with the CapEx. We're expecting some billing going on in the fourth quarter and then a January break-even for January 2026. When we look at it, there will be some CapEx spending. We do not expect much. How much did we spend in 2024 for the overall US, Chris? Top of your head. What was that number? The CapEx for 2024? Yeah. It was $1.2 million. We are in a good position now. Matt, I think we have covered it before that when we hit 80%, we keep it at 80% because we have to start depreciating the minute that we put it in place. We are in pretty good shape right now. As we start seeing the sales funnel move to 90% on probability of close, Chuck Piluso, our CTO, does a great job at managing that. With that, we add equipment to where it is required for the services that they are. I think we are in a good spot right now. The U.K. and the colony, he added two additional two folks, one in partner side of things and the other on sales engineering. I think we're really okay for this year. I wouldn't expect much, really, to increase. We're pretty much in place. Got it. Thank you. Maybe a common question for me, but how comprehensively do you feel with the expansion into the UK and Europe? Are you covering the migration to cloud on the IBM Power side? Do you feel like you're touching most of the opportunities on that migration, or is there still more work to do to touch every opportunity that's coming to market? Matt, since we spent some time together over the last few years, there's nothing that I'm satisfied with. It's just a personality thing. Can we do more? Yes. Hal Schwartz doing a great job working, I mean, as President, but actively involved in the marketing as well as running CloudFirst, which is our 95% of our revenue, working with the digital marketing companies and uncovering ways for us to be able to increase the lead generation. It has slowed down slightly because a lot of folks are moving over to more of a ChatGPT search to see who's the best provider of this or that. Howell has been working and uncovered that, by the way, with the digital market agency to improve the lead flow. We had a slight dip, but it's still coming in our marketing leads and then converting them to sales leads. The team does a great job at closing them. The partner on the partner side, we're trying to grow that as well. I think we're okay with it, but just never satisfied. Got it. Maybe one last question before I jump back in the queue, if possible. You touched a couple of times on regulated markets and having maybe increasing success there. Maybe can you go a little bit deeper into maybe what do you think is driving those wins and what kind of pipeline is there to continue expanding into heavily regulated opportunities? We spent some money on the certifications. All of the exact certifications, I don't know. That's a conversation you can cover with Hal Schwartz and Chuck Piluso on that. We have all the certifications. We have all that's required in the UK on it. When you start looking at moving from on-premise to, we'll call it cloud, a very general term, but let's call it cloud hosting and disaster recovery. Cybersecurity is a key point. That's what everybody's worried about with the cloud. If I move it to the cloud, how secure is it? We are very secure. We do all of the things required to ensure and make the prospect comfortable that this is a better environment in many cases than they can create. Regulatory compliance, cybersecurity is one of the important things. We have a very good reputation in migrating the data from on-premise to off-premise. I would say it's one of the leading things that folks come to us. IBM is one of our competitors, but we do a better job at migration, in my opinion, and we are easier to deal with. When we look at regulations, we have to start thinking about cybersecurity and all that goes along with it. We have spent some time and some money on our compliance areas. That is how you end up bringing in the mid-size and hopefully the enterprise accounts. We have sold some very large accounts in 2024. Regulations, compliance, cybersecurity is key. Thank you. Thank you, Matt. Thank you. Just a reminder to ask a question, press Star one on your phone. To remove your question, press Star two. Our next question comes from Adam Waldo with Lismore Partners. Please state your question. Yes. Good day, Chuck and Chris. I hope you can hear me okay. Sure. Hi, Adam. One quick financial reporting question for Chris and then some strategic and capital allocation questions for Chuck, if I may. Chris, on the financial reporting side, if you strip out the often lumpy and pretty large hardware sales from each of 2023 and 2024's consolidated results, what organic growth rate did the rest of the business grow its revenue? I got that. I have that because I've done some of the calculations, Adam, with Chris. We were asked that question a bunch of times during investor meetings, and we had 16 of them last Tuesday and Wednesday. When you just take to get about the software and all the hardware maintenance that occurs and you see that lumpiness that goes on, especially in our investor presentation, when we look at organic growth on subscription, cloud, disaster recovery, and cloud hosting, that organic piece, because the rest of it's kind of stable. Just looking at that, it's a 17.8% compounded annual growth rate. When we roll Flagship in there, it's 30%. Forget Flagship. Everybody always wants to know about what's your organic growth, but then they ask the question about what does an acquisition mean to you? The acquisition meant to us was 30% compounded annual growth rate. If you just take subscription, cloud, what we call true subscription, which is a subset of annual recurring revenue, it's slightly under 18%. It's like 17.8%. That's a CAGR. Would it have been meaningfully different just in 2024 relative to 2023? Chuck, was 2024 pretty similar growth rate on that metric? I'd have to calculate that, Adam. I would have to do that. I can do that very quickly. If you want, send me an email and I'll get it right back to you or Ali can get it and stuff. Yes, I can certainly do that. It's been kind of steady in growing. That's why I pulled that flagship on that because 30 is a large number. I do like the 18%. I'd like it to be 20%, but it's 18%. When you look at the industry benchmarks, 18% is pretty good. Okay. Now, switching to the strategic and capital allocation side, look, you've been very clear for last quarter's conference call, the conference at which you were in attendance about a week or so ago, and obviously on today's call, that you're frustrated with the stock price. It trades at about 0.6 times. When you strip out your cash, it trades at about 0.6 times your run rate and/or recurring revenue of $22 million that you reported today. I guess two questions on that. One, at that $22 million annual recurring revenue run rate, are you comfortable that you can be free cash flow neutral or better in 2025 without meeting equipment sales, or would you need a small amount of equipment sales to be comfortable that you'd be free cash flow positive in 2025 after you're about free cash flow neutral in 2024? I'll turn that over to Chris. Chris. I mean, we didn't have much equipment sales this year. We just didn't. If you look at, Chris, what was the percentage of ARR to total revenue in the year? What was the? It was over 80. It was over 80%. Correct. And what was the third quarter? Do you remember? That was a bigger number, I think. I think it was about. You clipped on me there. I don't know. 80 or 82% for the Q3? Yeah. Yeah. We didn't have much in equipment sales at all. When we do the budgeting, Adam, what happens is we put a number on equipment and we just straight line it. We look actual to budget. You can make your whole year with a December 2024 sale, which didn't happen, which might roll over to future quarters. I think we're fine without equipment sales, which has not been the case previous years. I think we're fine because CloudFirst alone has around a, when you strip it out, just on cloud services, around a 30% EBITDA margin. I think without equipment, we're fine. As to the other elements of annual recurring revenue, if you take the $5 million in software renewal and hardware maintenance, it's around a 15% margin. The real valuable things that really go on, I'm going to say, is subscription, disaster recovery, and hosting, and managed services. That we do probably. Oh, sorry. I'm sorry. I was going to say, and we do between, let's say, $180,000 and $220,000 a month on those managed services. And those are fairly large accounts. It sounds as if you're feeling quite good that you set up to be free cash flow neutral or positive in 2025, given your growth and investment plans. You're sitting with over $12 million of cash on the balance sheet, which is approximately half of the market cap of the stock. Increasingly, the public equity markets are dominated by algorithmic and quant traders, particularly in the micro-cap and small-cap areas of the market. Companies are increasingly basically disciplining the public markets' lack of fundamental valuation of their shares through stock buybacks. To what extent has that been discussed at the board level here? Obviously, you have, it seems like, significant financial flexibility to discipline the public markets' fair valuation of your stock through buybacks. I've thought about it. I brought it up to the board. I will say that because the share price, there it is, we really can't use our equity for acquisition. When we look at the cash that we have in the bank, we really don't want to do a $10 million revenue acquisition for many reasons. I would need a therapist to do any more in that level. Frankly, we need to look at $20 million revenue acquisitions. We are preserving that cash for organic growth primarily. As to the buyback of the shares, I think maybe a focus might be better to focus on warrants. We have warrants, outstanding public warrants, as well as private warrants. I think maybe we should be using some of those shares to get rid of that overhang that's there. Actually buying back the common shares, I really rather save the money for organic growth because I think we can do it better ourselves than to go do a $10 million revenue acquisition. When we start looking at those managed service providers, which we have, usually around 50% of their revenue is recurring and 50% is non-recurring, at that point, we'd rather be in a country in Europe, bringing us into Europe and looking at that, increasing our marketing capability, increasing our sales force and partnership programs. I'm not going to say that we're discounting it to 100%, but I think our focus on relating to buyback should be in the warrant area. Super helpful. Thank you, Chuck. And good luck for us during 2025. Thanks, Adam. Thank you. There are no further questions at this time. I'll hand the floor back to Chuck Piluso for closing remarks. Thank you. As I discussed on the call, 2024 was a year of focus and follow-through. We delivered on key financial goals, advanced our shift towards recurring revenue, and expanded our international footprint. These efforts have strengthened both our operations and our market position. As we move into 2025, we're building on that momentum with a clear direction, a very disciplined approach, and the foundation needed to support continued growth. We remain committed to providing our shareholders with meaningful updates, and I would like to thank everyone who joined our call today. We appreciate it. Thank you. Have a great day. Thank you. This concludes today's call. I'll pardon my disconnect. Have a good day.