Data Storage Corporation (Nasdaq: DTST) has begun a tender offer to repurchase up to 6,192,990 shares of its common stock at a price of $5.20 per share, less applicable withholding taxes and without interest. The aggregate purchase price for the offer is up to $32,203,548. The offer was filed with the U.S. Securities and Exchange Commission on December 8 2025 and will expire at 12:00 a.m. New York City time on January 7 2026 unless extended.
The tender offer is fully funded with cash on hand, including the $24 million net proceeds from the sale of the company’s CloudFirst cloud‑services business, which closed on September 11 2025 after shareholder approval on September 10. The sale generated $40 million in gross proceeds and $24 million in net cash, providing a substantial liquidity cushion that enables the share‑repurchase program and supports the company’s strategic pivot.
The repurchase program is part of a broader shift away from the legacy CloudFirst platform toward high‑growth verticals such as GPU infrastructure‑as‑a‑service, AI‑driven software, cybersecurity, and voice/data telecommunications. By reducing the share count, the company aims to increase the ownership percentage of non‑tendering shareholders and improve earnings per share once the CloudFirst sale gain is amortized. CEO Chuck Piluso said the quarter was “transformative,” noting that the sale and the new focus “position the company for disciplined growth in markets with higher margins and recurring revenue.”
Financially, the company’s Q3 2025 results were driven largely by the CloudFirst sale. Net income rose to $16.8 million from $122,000 in Q3 2024, a jump of more than 13,000 percent, because the sale generated a one‑time gain. Revenue from continuing operations—primarily the Nexxis telecommunications subsidiary—grew 28.2 percent year‑over‑year to $5.8 million, reflecting strong demand for voice and data connectivity services. However, operating loss widened due to a 12 percent increase in selling, general, and administrative expenses, driven by investments in new product development and market expansion.
The company’s strategic pivot is supported by market opportunities in AI and GPU computing, where demand for high‑performance computing resources is accelerating. By reallocating resources from the legacy CloudFirst platform to these high‑margin segments, Data Storage Corp. expects to capture a larger share of the growing AI services market while maintaining a stable recurring revenue base from Nexxis. The tender offer, coupled with the sale proceeds, signals management’s confidence in the company’s long‑term trajectory and its commitment to returning value to shareholders while investing in future growth.
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