Core Insights - CSP Inc. (CSPI) shares have decreased by 15.1% since the fourth quarter results for fiscal 2025, contrasting with a 0.2% decline in the S&P 500 index, but have rebounded by 16.2% over the past month compared to a 2.7% increase in the S&P 500 [1] Financial Performance - For the quarter ending September 30, 2025, CSP reported revenues of $14.5 million, an 11% increase from $13 million in the same quarter last year, primarily driven by a surge in service revenues [2] - Gross profit rose to $5.3 million from $3.7 million a year earlier, resulting in a gross margin increase of 800 basis points to 37% from 28% [2] - The company posted a net loss of $191,000, or 2 cents per diluted share, an improvement from a net loss of $1.7 million, or 18 cents per diluted share, in the prior-year quarter [2] Annual Performance - For fiscal 2025, revenues increased by 6% to $58.7 million, while the net loss narrowed to $91,000, or 1 cent per share, from $326,000, or 4 cents per share, in fiscal 2024 [3] Revenue Composition - Service revenues surged by 63% year over year in the fiscal fourth quarter, accounting for 44% of total revenues compared to about 30% in the previous year [4] - For fiscal 2025, services represented 36% of total revenues versus 33% a year earlier, indicating a shift towards higher-margin offerings [4] Operating Metrics - The operating loss for the quarter narrowed to $0.5 million from $2 million a year earlier, reflecting margin expansion and stable operating expenses [5] - CSP ended fiscal 2025 with $27.4 million in cash and cash equivalents, down from $30.6 million a year earlier, while financing receivables increased [5] Management Insights - Management characterized the quarter as a strong finish to the fiscal year, highlighting the Technology Solutions segment's role in driving growth [6] - There is an emphasis on high customer retention and the contribution of managed services and cloud offerings to service revenue growth [6] - Leadership discussed expanding the sales organization to capture a larger share of the services market, citing opportunities for continued double-digit growth [7] Strategic Focus - Management pointed to the rapid growth in service revenues as a significant factor behind the quarter's results, which has a higher gross margin than product sales [8] - Continued investment in building a sales pipeline and customer adoption is expected to support long-term growth, despite weighing on near-term profitability [9] Future Outlook - Management expressed optimism about delivering additional growth and improving profitability in fiscal year 2026, with expectations for continued momentum in services and increased adoption of AZT PROTECT [10][11] - The timing of customer rollouts and revenue recognition may be uneven, leading to variability in quarterly revenue patterns [11] Corporate Developments - In the fiscal fourth quarter, CSP's board declared a quarterly cash dividend of 3 cents per share, payable January 15, 2026, and repurchased approximately 19,500 shares for $234,000 [12] - The company highlighted partnerships with Rockwell Automation distributors and an agreement to integrate AZT PROTECT into Acronis' Cyber Protect solution, reflecting efforts to broaden distribution [12]

Financial Performance - Revenue increased by approximately $3.5 million, or 6%, to $58.7 million for the fiscal year ended September 30, 2025, compared to $55.2 million for the fiscal year ended September 30, 2024[120]. - Gross profit margin percentage decreased to 32% for the fiscal year ended September 30, 2025, compared to 34% for the fiscal year ended September 30, 2024[120]. - Operating loss was $(3.1) million for the fiscal year ended September 30, 2025, compared to an operating loss of $(1.9) million for the fiscal year ended September 30, 2024[120]. - The net loss for the fiscal year ended September 30, 2025, was $(91) thousand, compared to a net loss of $(326) thousand for the fiscal year ended September 30, 2024[121]. - Total costs and expenses increased to $61.8 million for the fiscal year ended September 30, 2025, compared to $57.1 million for the fiscal year ended September 30, 2024[121]. Revenue Breakdown - TS segment revenue increased by approximately $5.7 million, with a $5.5 million increase in the U.S. division and a $0.2 million increase in the U.K. division[124]. - HPP segment revenue decreased by approximately $2.2 million, or 54%, primarily due to decreased ARIA AZT revenue of $1.7 million[126]. - The Americas revenue increased by $3.8 million for the fiscal year ended September 30, 2025, primarily due to increased revenue from the TS-US division[130]. Expenses and Costs - Research and development expenses increased by $0.3 million from $3.0 million in fiscal year 2024 to $3.3 million in fiscal year 2025, primarily for product engineering expenses related to ARIA cyber security products[135]. - SG&A expenses for the TS segment increased by $0.6 million (5%) to $13.8 million, while the HPP segment remained flat at $4.6 million for the fiscal year ended September 30, 2025[136]. - Total other income for the year ended September 30, 2025 was $1.448 million, a decrease of $5, primarily due to a foreign exchange gain increase of $0.5 million[137]. - Interest expense rose by $0.1 million to $0.357 million for the year ended September 30, 2025, attributed to multi-year vendor agreements in the TS U.S. division[138]. - Interest income decreased by $0.2 million to $1.854 million for the year ended September 30, 2025, due to lower average balances and interest rates[139]. Taxation - The effective tax rate for the fiscal year ended September 30, 2025, was 94.5%, compared to 22.2% for the fiscal year ended September 30, 2024[120]. - The company recorded an income tax benefit of $(1.6) million, resulting in an effective tax rate of 94.5% for the year ended September 30, 2025[140]. Cash Flow and Liquidity - Cash and cash equivalents decreased by $3.2 million to $27.4 million as of September 30, 2025, from $30.6 million as of September 30, 2024[145]. - Cash provided by operating activities was $2.3 million for the year ended September 30, 2025, down from $4.2 million in the prior year[147]. - Cash used in investing activities increased to $(428) thousand for the year ended September 30, 2025, compared to $(256) thousand in the prior year[148]. - Cash used in financing activities was $(5.0) million for the year ended September 30, 2025, compared to $1.4 million provided in the prior year[149]. - The company maintained a line of credit with a capacity of up to $15.0 million, with $14.1 million available as of September 30, 2025[152]. Accounting Policies - Revenue recognition is recorded as gross when the company is the principal party, and net when acting as a broker, affecting the overall revenue reported[163]. - The company recognizes deferred tax assets and liabilities based on enacted tax rates, with adjustments made for changes in tax rates impacting income[166]. Pension and Retirement Plans - Pension and retirement plans are recognized on the balance sheet, with gains and losses recorded in accumulated other comprehensive loss until amortized[169]. - Defined benefit plans in the U.K. are closed to new hires, while defined contribution plans cover most employees, impacting future pension obligations[170]. - Pension expense calculations involve estimates for expected return on assets and compensation increases, with changes in these estimates affecting overall pension expense[171]. - The company funds its pension plans to meet legal requirements, with liabilities for excess funding levels accrued on the balance sheet[172].

Financial Data and Key Metrics Changes - Overall fourth quarter revenue increased by 11% to $14.5 million compared to $13 million in the same quarter last year [5][13] - Gross margins improved by over 800 basis points to 37% in the fourth quarter, driven by significant growth in service revenue [5][13] - For the full fiscal year, revenue grew by 6%, with gross profit at $18.5 million, representing 32% of sales [15][16] Business Line Data and Key Metrics Changes - Service revenue grew by 63% in the fourth quarter, accounting for approximately 44% of total revenue, up from 30% in the prior year [6][13] - For the full year, service revenue represented 36% of total revenue, compared to 33% the previous year [6] - Product revenue decreased by $1.1 million in the fourth quarter [13] Market Data and Key Metrics Changes - The company expanded its customer base across various industries, including finance, manufacturing, oil and gas, healthcare, aerospace, education, utilities, telecommunications, and maritime [6] - The managed cloud and MSP services segment experienced healthy double-digit growth during the fiscal year [7] Company Strategy and Development Direction - The company aims to build on the growth of its service business by allocating more resources and adding sales representatives [7] - There is a focus on expanding the AZT Protect cybersecurity offering, particularly in the maritime industry and industrial IoT devices [10][11] - The company is optimistic about converting its growing pipeline into significant sales in fiscal 2026 [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the strong finish to the fiscal year and the potential for increased profitability in fiscal 2026 [5][12] - The company believes it is well-positioned to leverage revenue growth going forward, supported by investments made in infrastructure [12] Other Important Information - The company reported a net loss of $191,000 for the fourth quarter, compared to a net income of $1.7 million in the prior year [14] - Cash and cash equivalents stood at $27.4 million as of September 30, 2025, down about 10% from the previous year [15] Q&A Session Summary Question: Service revenue calculation - Analyst confirmed the service revenue in the fourth quarter was approximately $6.4 million, based on 44% of total sales [19][20] Question: IIoT expansion of AZT Protect - Management acknowledged the potential for significant growth in the IIoT market and the need for OEM agreements [25][26] Question: Acronis integration - Management stated that AZT is being integrated into Acronis software, but revenue projections are still uncertain [51][52] Question: UFT relationship updates - Management provided updates on the relationship with UFT, indicating progress with case studies and future marketing events [53] Question: Revenue predictability - Management indicated that revenue projections for the upcoming year are uncertain and may vary [72]

Financial Data and Key Metrics Changes - Overall fourth quarter revenue increased by 11% to $14.5 million compared to $13 million in the same quarter last year [14] - Gross margins improved by over 800 basis points to 37% in the fourth quarter, driven by significant service revenue growth [5][14] - For the full fiscal year, revenue grew by 6%, with gross profit at $18.5 million, representing 32% of sales [16] Business Line Data and Key Metrics Changes - Service revenue grew by 63% in the fourth quarter, accounting for approximately 44% of total revenue, up from 30% in the prior year [6][14] - For the full year, service revenue represented 36% of total revenue, compared to 33% a year ago [6] - Product revenue decreased by $1.1 million in the fourth quarter [14] Market Data and Key Metrics Changes - The company expanded its customer base across various industries, including finance, manufacturing, oil and gas, healthcare, aerospace, education, utilities, telecommunications, and maritime [6] - The Managed Cloud and MSP services segment grew at a healthy double-digit rate during fiscal 2025 [7] Company Strategy and Development Direction - The company aims to build on the growth of its service business by allocating more resources and adding sales representatives [7] - There is a focus on expanding the AZT PROTECT cybersecurity offering, particularly in the maritime industry and Industrial IoT devices [10][11] - The company is optimistic about converting its growing pipeline into significant sales in fiscal 2026 [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in generating consistent profitability improvements for fiscal 2026, supported by infrastructure investments [13] - The company is excited about the potential for growth in the service segment and the product business as it enters fiscal 2026 [12][13] Other Important Information - The company reported a net loss of $191,000 for the fourth quarter, compared to a net income of $1.7 million in the prior year [15] - Cash and cash equivalents stood at $27.4 million as of September 30, 2025, down about 10% from the previous year [16] Q&A Session Summary Question: Service revenue calculation - Analyst confirmed the service revenue in the fourth quarter was approximately $6.4 million, which was well received by management [21][22] Question: IIoT expansion and potential customers - Management acknowledged the potential for significant deployments in the IIoT market and the need for OEM agreements [27][28] Question: Leads from Rockwell show - Management reported a 50% increase in leads from the Rockwell show compared to the previous year, with improved quality of leads due to established relationships [42][45] Question: Integration with Acronis - Management confirmed that AZT is being integrated into Acronis software, but revenue projections are still uncertain [54][68] Question: UFT relationship and case studies - Management provided updates on the relationship with UFT, indicating progress with case studies and future marketing efforts [56][57] Question: Share repurchase blackout period - Management clarified the blackout period for share repurchases due to earnings reporting schedules [58][60]

Financial Data and Key Metrics Changes - For the fiscal fourth quarter, revenue increased by 11% to $14.5 million compared to $13 million in the same quarter last year [13] - Gross margins improved by over 800 basis points to 37%, driven by significant growth in service revenue [5][14] - The company reported a net loss of $191,000 or $0.02 per diluted share for the fourth quarter, compared to a net income of $1.7 million or $0.18 per diluted share in the prior year [15] Business Line Data and Key Metrics Changes - Service revenue grew by 63% year-over-year, representing approximately 44% of total revenue in the fourth quarter, up from 30% in the same quarter last year [6][14] - For the full fiscal year, service revenue accounted for 36% of total revenue, compared to 33% the previous year [6] - Product revenue decreased by $1.1 million in the fourth quarter [13] Market Data and Key Metrics Changes - The company expanded its customer base across various industries, including finance, manufacturing, oil and gas, healthcare, aerospace, education, utilities, telecommunications, and maritime [6] - The managed cloud and MSP services segment experienced healthy double-digit growth during fiscal 2025 [7] Company Strategy and Development Direction - The company aims to build on the growth of its service business by allocating more resources, including adding sales representatives [7] - There is a focus on expanding the AZT Protect cybersecurity offering, particularly in the maritime industry and Industrial IoT devices [10][11] - The company is optimistic about generating consistent profitability improvements in fiscal 2026 due to infrastructure investments and growth strategies [12] Management's Comments on Operating Environment and Future Outlook - Management expressed excitement about the strong results from the service segment and the potential for growth in fiscal 2026 [11][12] - The company believes it has a competitive advantage in the cybersecurity space and aims to convert building momentum into significant sales [10] Other Important Information - The company maintained a strong balance sheet with cash and cash equivalents of $27.4 million, despite a 10% decrease from the previous year [16] - The company plans to pay a $0.03 per share dividend on July 15, 2026, to shareholders of record on December 26, 2025 [16] Q&A Session Summary Question: Service revenue calculation - The service revenue in the fourth quarter was approximately $6.4 million, which is 44% of total sales [20] Question: Expansion of AZT Protect - Management acknowledged that the expansion of AZT Protect is a game changer and is focusing on signing OEM agreements in the IIoT environment [25][26] Question: Integration with Acronis - AZT is being integrated into Acronis software, but revenue projections are too early to determine [53] Question: Relationship with UFT - The relationship with UFT is strong, and case studies are being developed for implementation with their customers [55] Question: Share repurchase blackout period - The company is subject to a blackout period for share repurchases until mid-February due to earnings reporting [56][59]

Financial Performance - CSP Inc. reported an 11% increase in total revenue for the fiscal fourth quarter ended September 30, 2025, reaching $14.5 million compared to $13.0 million in the same prior year quarter [2][7]. - For the full fiscal year 2025, total revenue was $58.7 million, a 6% increase from $55.2 million in the prior year [10]. - The company experienced a net loss of $(191) thousand, or $(0.02) loss per diluted common share, significantly improved from a net loss of $(1.7) million, or $(0.18) loss per diluted common share in the prior fiscal year fourth quarter [8][10]. Revenue Composition - Services revenue surged by 63%, accounting for 44% of total revenue in the fiscal 2025 fourth quarter [6]. - Gross margin expanded more than 800 basis points to 37% from 28% in the same prior year quarter, driven by a higher proportion of services revenue [6][8]. Business Development - The Technology Solutions business achieved near-record profitability and is expanding its sales team to capture a larger share of the services market [4]. - AZT PROTECT customer engagements increased significantly, setting the stage for growth in fiscal 2026, with new features enabling entry into the Embedded IIOT market [6][5]. Shareholder Returns - The company declared a quarterly dividend of $0.03 per share, payable on January 15, 2026 [2][6]. - The company repurchased approximately 19,500 shares for a total cost of $234 thousand during the fiscal fourth quarter [9]. Cash Position - Cash and cash equivalents as of September 30, 2025, were $27.4 million, supporting growth strategies for the AZT PROTECT offering [9].

Core Viewpoint - CSPi is set to release its fiscal 2025 fourth quarter and full year financial results on December 16, 2025, before the market opens [1] Company Summary - CSPi is recognized as an award-winning provider of security and packet capture products, managed IT and professional services, and technology solutions [1] - The announcement was made by CSPi's President and CEO Victor Dellovo, along with CFO Gary W. [1]

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2][3] - The news team covers key finance and investing hubs including London, New York, Toronto, Vancouver, Sydney, and Perth [2] - Proactive focuses on medium and small-cap markets while also covering blue-chip companies, commodities, and broader investment stories [2][3] Group 2 - The team delivers news and insights across various sectors including biotech, pharma, mining, natural resources, battery metals, oil and gas, crypto, and emerging technologies [3] - Proactive adopts technology to enhance workflows and improve content production [4][5] - All content published by Proactive is edited and authored by humans, ensuring adherence to best practices in content production [5]

Core Insights - The article discusses the challenges and unpredictability of financial markets, emphasizing the difficulty in accurately predicting trends and identifying value opportunities [1]. Group 1 - The author expresses a strong interest in financial history and its application to current market analysis [1]. - There is a focus on the subjective nature of opinions regarding market predictions, suggesting that they should be taken with caution [2]. - The article highlights the importance of understanding past performance while acknowledging that it does not guarantee future results [3].

Core Viewpoint - CSPI reported strong revenue growth in its fiscal third quarter, driven by the Technology Solutions segment and the AZT PROTECT cybersecurity solution, despite facing margin pressures and a modest net loss [12]. Revenue & Earnings Performances - CSPI generated revenues of $15.4 million for the quarter ended June 30, 2025, an 18% increase from $13.1 million in the same period last year [2]. - Product sales rose 29% to $10.2 million, while service revenues increased marginally to $5.3 million [2]. - Gross profit decreased to $4.5 million from $4.6 million, with margins contracting to 29% from 34% due to a higher mix of product revenues and increased component costs [2]. - The company reported a net loss of $0.3 million, or 3 cents per share, compared to a net loss of $0.2 million, or 2 cents per share, a year earlier [2]. Other Key Business Metrics - The Technology Solutions segment achieved a 20% year-over-year revenue increase, driven by strong demand for cloud services and activity in the maritime sector [3]. - The TS division secured a significant Microsoft Azure project for a Florida-based healthcare provider, highlighting CSPI's strength in managed cloud offerings [3]. High-Performance Products (HPP) - The AZT PROTECT cybersecurity solution saw momentum, with new customer deployments in the steel, concrete, and lumber industries, and follow-up contracts in South Africa [4]. - Management noted that reseller partnerships with leading Rockwell Automation distributors are transitioning from early adoption to revenue acceleration, setting the stage for broader penetration in fiscal 2026 [4]. Management Commentary - CEO Victor Dellovo emphasized a land and expand strategy, where initial deployments of AZT PROTECT serve as proof points for broader rollouts across enterprise networks [5]. - Customers reported measurable operational benefits, such as preventing system outages in critical industrial environments, indicating potential for recurring contracts as the installed base grows [5]. Financial Overview - CFO Gary Levine explained that gross margin pressure was due to product mix and higher costs, while operating expenses increased from higher sales and marketing expenditures [6]. - The company ended the quarter with $26.3 million in cash and continued share repurchases, reflecting financial flexibility despite near-term earnings softness [6]. Factors Influencing Performance - Revenue growth was strong, but profitability was limited by a higher weighting of lower-margin product revenues and additional engineering and consulting expenses for AZT PROTECT [7][8]. - Modest service revenue growth tempered the recurring revenue contribution that typically supports margin stability [8]. Future Outlook - Management expressed optimism for the fourth quarter and fiscal 2025, noting momentum in both TS and HPP segments [10]. - There is accelerating interest from resellers and international partners, which could lead to larger contract opportunities [10]. Other Developments - CSPI was added to the Russell 3000 Index, increasing its exposure to institutional investors [11]. - The company authorized a quarterly dividend of $0.03 per share, reflecting a commitment to shareholder returns [11]. - CSPI repurchased over 19,000 shares for $0.3 million, with additional shares available under the 2021 repurchase program [11].