CSP (NasdaqGM:CSPI) Q4 2025 Earnings Call December 16, 2025 10:00 AM ET Company ParticipantsVictor Dellovo - CEO and General ManagerGary Levine - CFOMichael Polyviou - Investor Relations PartnerJoseph Nerges - Managing Director of Equity ResearchConference Call ParticipantsBrett Davidson - AnalystWill Lauber - AnalystMike Price - AnalystOperatorGood day, everyone, and welcome to the CSPI's Fiscal Fourth Quarter and Full Year 2025 Conference Call. At this time, all participants are placed on a listen-only mo ...

CSP (NasdaqGM:CSPI) Q4 2025 Earnings Call December 16, 2025 10:00 AM ET Speaker4Good day, everyone, and welcome to the CSPI's Fiscal Fourth Quarter and Full Year 2025 Conference Call. At this time, all participants are placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, Michael Polyviou. Sir, the floor is yours.Speaker5Thank you, Matthew, and hello, everyone. Thank you for joining us to re ...

Financial Data and Key Metrics Changes - For the second quarter ended March 31, 2025, the company reported revenue of $13.1 million, a decrease from $13.7 million in the prior year [5][13] - Service revenue was $4.6 million compared to $5.2 million in the same period last year, reflecting a decline due to a significant multimillion-dollar deal not being repeated [5][13] - Gross profit for the quarter was $4.2 million, representing 32% of sales, down from $6.2 million or 45.3% of sales in the previous year, attributed to higher component costs [13][14] - The company reported a loss of $108,000 or $0.01 per diluted share for the quarter, while for the six months, revenue was $28.5 million compared to $29.1 million in the first half of the previous fiscal year [15][16] Business Line Data and Key Metrics Changes - The technology solutions (TS) business generated $12 million in revenue and remains profitable, with ongoing contracts in the cruise line and ocean freighter markets [10][11] - The AZT Protect product line is gaining traction, with six new customers signed during the quarter, indicating a growing pipeline and potential for future sales [6][9] Market Data and Key Metrics Changes - The company has established a new reseller partnership with Rexel USA, enhancing its market presence in the industrial equipment sector [7] - The South African market is being targeted with a new contract that could generate seven-figure sales, indicating expansion into new geographic areas [10] Company Strategy and Development Direction - The company is focused on expanding its AZT Protect product line and enhancing its sales team to build brand recognition in the operational technology (OT) market [9] - Continued investments in marketing and partnerships are aimed at increasing market awareness and driving future sales growth [8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged potential challenges in the operating environment, including price increases and reduced customer spending, but remains optimistic about the growth prospects for AZT Protect [12] - The company is entering the second half of the fiscal year with momentum from recent contracts and an expanding customer base [11][35] Other Important Information - The company finished the quarter with over $29 million in cash and cash equivalents, allowing for continued investment and a quarterly cash dividend of $0.03 per share [11][15] - The Board of Directors has authorized a cash dividend payable on June 11, 2025, indicating a commitment to returning value to shareholders [16] Q&A Session Summary Question: Inquiry about the backlog for AZT - Management indicated that the pipeline is growing but refrained from providing specific numbers, stating that deals are at different stages of the sales process [20] Question: Status of the cruise ship business - Management confirmed that the cruise ship business remains steady, with ongoing modifications and contracts being fulfilled as ships become available [22][23] Question: Uniqueness of the cell tower contract - Management highlighted the unique advantages of their solution for cell towers, including space efficiency and compatibility with Linux, which differentiates them from competitors [28] Question: Backlog of cloud-based projects - Management confirmed that the backlog of cloud-based projects has increased and is currently in the twenties, indicating strong demand [31]

Financial Data and Key Metrics Changes - For the second quarter ended March 31, 2025, the company reported revenue of $13.1 million, a decrease from $13.7 million in the prior year [5][13] - Service revenue was $4.6 million compared to $5.2 million in the same period last year, reflecting a decline due to a single multimillion-dollar deal not being repeated [5][13] - Gross profit for the quarter was $4.2 million, representing 32% of sales, down from $6.2 million or 45.3% of sales in the prior year, attributed to higher component costs and the absence of a high-margin contract [13] - The company reported a loss of $108,000 or $0.01 per diluted share for the quarter, while for the six months, revenue was $28.5 million compared to $29.1 million in the previous year [14][15] Business Line Data and Key Metrics Changes - The technology solutions (TS) business generated $12 million in revenue and remains profitable, with ongoing contracts in the cruise line and ocean freighter markets [10][11] - The AZT Protect product line is gaining traction, with six new customers signed during the quarter, indicating a growing pipeline and potential for future sales [6][9] Market Data and Key Metrics Changes - The company is expanding its relationships with AZT Protect resellers, particularly with Rexel USA, enhancing its market presence in the industrial equipment sector [7][8] - A new contract in South Africa for AZT Protect could generate seven-figure sales over the next 18 months, indicating potential growth in the cell tower protection market [10] Company Strategy and Development Direction - The company is focused on enhancing its sales team and building brand recognition for AZT Protect in the operational technology (OT) market [9] - Continued investments in marketing and partnerships are aimed at expanding revenue relationships and increasing market share [8][9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged potential challenges in the operating environment, including price increases and reduced customer spending, but remains optimistic about the growth prospects for AZT Protect [12] - The company entered the second half of the fiscal year with momentum from recent contracts and is focused on maximizing opportunities [11][34] Other Important Information - The company finished the quarter with over $29 million in cash and cash equivalents and repurchased $384,000 worth of common shares [11][15] - The Board of Directors approved a $0.03 cash dividend for shareholders, reflecting the company's robust balance sheet [15] Q&A Session Summary Question: Inquiry about the backlog for AZT - Management indicated that the pipeline is growing but refrained from providing specific numbers on backlog or contract sizes [18][19] Question: Status of the cruise ship business - Management confirmed that the cruise ship business remains steady, with ongoing modifications and contracts [20][21] Question: Uniqueness of the cell tower contract - Management highlighted the unique space and CPU requirements of cell towers as a competitive advantage, noting that they are reaching out to similar companies [25][26][28] Question: Backlog of cloud-based projects - Management confirmed that the backlog of cloud-based projects has increased and is currently in the twenties [29][30]