Core Insights - CSP Inc. (CSPI) experienced a 6% decline in shares following the earnings report for Q2 fiscal 2025, contrasting with a 1.4% gain in the S&P 500 index during the same period [1] - Revenue for the quarter was reported at $13.1 million, a decrease of 4.1% from $13.7 million year-over-year, primarily due to a 74% drop in the High Performance Products (HPP) segment [2] - The company reported a net loss of $108,000, or 1 cent per diluted share, compared to a net income of $1.6 million, or 16 cents per diluted share, in the same quarter last year [3] Revenue and Profitability - Gross profit fell to $4.2 million from $6.5 million, with gross margin narrowing to 32% from 47% [4] - The HPP segment's gross margin decreased to 57% from 86%, while the Technology Solutions (TS) segment's gross margin declined to 31% from 39% [4] - Operating loss was reported at $994,000, compared to operating income of $1.2 million in the same quarter last year [5] Balance Sheet and Capital Allocation - As of March 31, 2025, CSP held $29.5 million in cash and cash equivalents, repurchased approximately $384,000 worth of common stock, and declared a quarterly dividend of 3 cents per share [6] Management Commentary - CEO Victor Dellovo noted that revenue performance was in line with internal expectations, highlighting a modest increase in product sales and a dip in service revenue due to the absence of a repeat multi-million-dollar contract [7] - CFO Gary Levine attributed gross margin compression to higher component costs and the lack of a high-margin sale from the previous year [8] Factors Influencing Performance - The significant revenue drop in the HPP segment was due to the absence of a large ARIA AZT PROTECT order that had boosted last year's results [9] - Foreign exchange losses of $132,000 and a $64,000 decrease in interest income also contributed to the net loss [10] Future Outlook - Management expressed confidence in the AZT PROTECT pipeline and ongoing investments in marketing and reseller partnerships, with an expanding backlog of cloud-based projects [11] - A new reseller partnership with Rexel USA and a significant agreement with Oryx Industries in South Africa were announced, potentially leading to growth in cybersecurity protection for cell towers [12] - Overall, CSP faced challenges in Q2 but is positioned for potential growth in the latter half of fiscal 2025, largely dependent on the success of its AZT PROTECT offerings [13]