CSP (US:CSPI)2020-05-14 19:42Financial Data and Key Metrics Changes - Total revenue for the fiscal second quarter was $16.1 million compared to $16.4 million in the prior year, indicating a slight decline [7][25] - Gross profit increased to $4.5 million, up approximately 20% from $3.7 million in the previous year, despite lower revenue [25][26] - Gross margin improved to 27.9%, up from 22.9% year-over-year, due to a favorable mix of higher margin business [26] Business Line Data and Key Metrics Changes - Technology Solutions (TS) revenue was $14.6 million, with a strong start in the first two months before being impacted by COVID-19 [11] - The Managed Service Practice (MSP) performed well, increasing the number of customers and maintaining high customer satisfaction [12] - High Performance Product (HPP) division revenue was $1.5 million, reflecting a decline in Myricom, partially offset by higher multi-computer royalties [16] Market Data and Key Metrics Changes - The cruise ship industry faced severe impacts due to COVID-19, delaying expected revenue opportunities [13] - The Microsoft practice achieved a growth rate of 140% in 2019 and is expected to continue growing this year [14] - The UCaaS market segment is projected to reach $79 billion, with CSPi anticipating a significant share [15] Company Strategy and Development Direction - CSPi is transitioning to a cybersecurity, wireless, and managed service company, focusing on higher margin products [8] - The company is investing in its ARIA cybersecurity platform, which has received multiple awards for innovation and effectiveness [17][20] - CSPi is expanding its engineering team to maintain high customer satisfaction and support growth [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the COVID-19 pandemic but expressed optimism about long-term prospects due to increased threats to digital infrastructure [10] - The company is focusing on liquidity and cost containment, having suspended share repurchase programs and cash dividends [29][31] - Management remains confident in the strength of their offerings and the interest in new product lines, with numerous proof-of-concepts scheduled [9][10] Other Important Information - The company received loans totaling less than $2.2 million from the Paycheck Protection Program under the CARES Act [30] - CSPi maintained its employee count at 116, without layoffs or furloughs, emphasizing the importance of its workforce for future success [31] Q&A Session Summary Question: Employee count and consistency - The current employee count is 116, consistent with previous quarters [33] Question: Income tax expenses under the CARES Act - The benefits from the CARES Act have already been reflected in the reported numbers for the current quarter [34][35] Question: Status of cable customer projects - Projects with cable customers are temporarily on hold due to internal priorities, but interest remains [40][42] Question: ARIA Advanced Detection and Response application - The ARIA application can automatically correct cybersecurity issues without requiring constant monitoring [45][46] Question: Product demonstrations - The five new product demos per week are specifically related to the ARIA ADR application [47]