CSP (CSPI) - 2025 Q2 - Quarterly Results

CSPi Fiscal 2025 Second Quarter Financial Highlights This report details CSPi's fiscal 2025 second quarter and six-month financial results, highlighting core business growth, AZT PROTECT market traction, and a strong financial position Overview and Business Highlights CSPi achieved double-digit core business sales growth in Q2 FY2025, excluding a prior-year large deal, while expanding its AZT PROTECT global pipeline, securing new clients, and declaring a quarterly dividend - Excluding a large one-time deal in the prior year, the business achieved double-digit sales growth in Q2 FY2025[3] - The AZT PROTECT product line is gaining market traction, evidenced by an increasing number of new customers and an expanding business pipeline through reseller and distribution channels[3][5] - A global pharmaceutical client renewed its customer support for AZT PROTECT with a six-figure, twelve-month contract[3][5] - The company secured a new contract in April to protect equipment for one of South Africa's largest cell tower providers, a relationship with potential for significant expansion[3][5] - The Board of Directors declared a quarterly dividend of $0.03 per share, payable on June 11, 2025[1] Financial Performance CSPi's Q2 and H1 FY2025 financial performance saw revenue, gross profit, and net income declines, primarily due to the absence of a significant prior-year comparable deal Fiscal 2025 Second Quarter Results CSPi reported a net loss for Q2 FY2025, with declines in total revenue and gross profit largely attributed to the non-recurrence of a significant prior-year deal Q2 Fiscal 2025 vs. Q2 Fiscal 2024 Performance | Metric | Q2 FY2025 | Q2 FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $13.1 million | $13.7 million | -4.4% | | Product Revenue | $8.6 million | $8.5 million | +1.2% | | Services Revenue | $4.6 million | $5.2 million | -11.5% | | Gross Profit | $4.2 million | $6.5 million | -35.5% | | Gross Margin | 32% | 47% | -15 p.p. | | Net (Loss) Income | $(0.1) million | $1.6 million | N/A | | Diluted EPS | $(0.01) | $0.16 | N/A | - The decline in revenue, gross profit, and net income was primarily due to a multi-million dollar agreement with a global pharmaceutical company in the second quarter of fiscal 2024, which was not repeated[4] - The company recorded an income tax benefit of $683 thousand in the quarter, mainly from the vesting of restricted stock awards[6] Fiscal 2025 Six-Month Results For the first six months of fiscal 2025, CSPi experienced a slight revenue decrease and significant declines in gross profit and net income compared to the prior year Six Months Fiscal 2025 vs. Six Months Fiscal 2024 Performance | Metric | H1 FY2025 | H1 FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $28.8 million | $29.1 million | -1.0% | | Gross Profit | $8.8 million | $10.6 million | -17.0% | | Gross Margin | 30% | 36% | -6 p.p. | | Net Income | $0.36 million | $1.5 million | -76.0% | | Diluted EPS | $0.04 | $0.15 | -73.3% | - The company reported an income tax benefit of $798 thousand for the six-month period, primarily from restricted stock awards[9] Financial Position and Shareholder Returns CSPi maintains a strong, debt-free balance sheet with $29.5 million in cash, supporting AZT PROTECT investments and demonstrating shareholder commitment through share repurchases and dividends - As of March 31, 2025, the company had a robust balance sheet with $29.5 million in cash and cash equivalents and no long-term debt[8][17] - The company repurchased 23,800 shares of its common stock for a total of $384 thousand during the fiscal second quarter[5][8] - Approximately 311 thousand shares remain available for repurchase under the existing authorization from 2011[8] Corporate Information This section outlines the financial results conference call details, CSPi's operational divisions including ARIA Cybersecurity and Technology Solutions, and a standard Safe Harbor statement for forward-looking information - A conference call to review financial results was scheduled for 10:00 a.m. (ET) on the day of the release[10] - CSPi operates two divisions: High Performance Products (ARIA Cybersecurity) and Technology Solutions (Managed IT and Professional Services)[11][12] - The report contains a Safe Harbor statement, cautioning that forward-looking statements are subject to risks and uncertainties[13][14] Condensed Unaudited Consolidated Financial Statements This section presents CSPi's detailed unaudited consolidated financial statements, including balance sheets and statements of operations for the specified periods Condensed Unaudited Consolidated Balance Sheets This table provides a snapshot of CSPi's financial position, detailing assets, liabilities, and shareholders' equity as of March 31, 2025, and September 30, 2024 Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $29,495 | $30,585 | | Total current assets | $50,342 | $54,849 | | Total assets | $67,122 | $69,436 | | Total current liabilities | $15,058 | $18,682 | | Total liabilities | $19,669 | $22,166 | | Total shareholders' equity | $47,453 | $47,270 | Condensed Unaudited Consolidated Statements of Operations This table summarizes CSPi's financial performance, presenting sales, gross profit, operating income, and net income for the three and six-month periods ended March 31, 2025, and 2024 Statement of Operations Summary (in thousands) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total sales | $13,147 | $13,706 | $28,817 | $29,081 | | Gross profit | $4,207 | $6,478 | $8,771 | $10,573 | | Operating (loss) income | $(994) | $1,234 | $(1,348) | $891 | | Net (loss) income | $(108) | $1,588 | $364 | $1,515 |