CSP (US:CSPI)2026-02-12 16:02Financial Data and Key Metrics Changes - For the fiscal first quarter ended December 31, 2025, the company generated $12 million in revenue, down from $15.7 million in the same period last year [34] - Product revenue decreased to $6.7 million from $11 million, primarily due to the absence of one-time transactions totaling approximately $4.5 million from the previous year [34] - Service revenue increased by 14.6% to $5.3 million from $4.7 million year-over-year [34] - Gross profit for the quarter was $4.7 million, slightly up from $4.6 million, with gross profit margins increasing to 39.3% from 29.1% [35] - Net income for the first quarter was $91,000 compared to $42,000 in the prior year, with diluted earnings per share at $0.01, down from $0.05 [36] Business Line Data and Key Metrics Changes - The technology solutions business continues to lead progress, with strong performance in managed cloud and managed service practices [6][28] - The managed service practice signed new customers expected to generate nearly $100,000 in monthly revenue starting this quarter [7][29] - The AZT Protect product suite achieved year-over-year revenue growth, serving 46 unique customers, with potential for multi-site installations [30] Market Data and Key Metrics Changes - The company is benefiting from the trend of organizational migration to the cloud, with increasing demand for operational support services post-migration [7][28] - The market for cybersecurity solutions is expanding, with the company positioned as a resource for enterprises facing operational technology cybersecurity challenges [31] Company Strategy and Development Direction - The strategic focus is on expanding service revenue and growing the monthly recurring revenue (MRR) base [5] - The company aims to leverage partnerships, particularly with Microsoft Azure, to enhance its managed service offerings [7][28] - Investments in the managed service practice are expected to yield returns through new customer acquisitions [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that fiscal 2026 will be a growth year, supported by infrastructure investments and a strong service segment [6][34] - The company anticipates generating substantial operating leverage as revenue grows, with a focus on maintaining high customer retention rates [8][34] Other Important Information - The company plans to pay a dividend of $0.03 per share on March 12, 2026, to shareholders of record as of February 26, 2026 [37] Q&A Session Summary Question: Clarification on service revenue categories - Management confirmed that service revenue includes multiple categories, with managed services being a significant portion [41][46] Question: Revenue predictability from Acronis integration - Management indicated that it is too early to quantify revenue from the integration with Acronis, as the APIs are still being built [67][68] Question: Share repurchase plans - Management confirmed plans to repurchase shares now that the blackout period has ended, indicating confidence in the company's stock [70][71] Question: Financing and customer repayment structure - Management clarified that the company continues to engage in financing roles with customers, which helps maintain strong relationships [87][88] Question: Multi-site customer approvals - Management provided insights into the timing of approvals for multi-site installations, indicating a growing frequency of such occurrences [90][92]