CSP INC /MA/ Q4 FY2024 earnings call

• Recurring revenue has seen significant growth, going from less than 5% of sales a few years ago to 17% of total sales in the fourth quarter and full year 2024. - Technology Solutions: Had momentum in the fourth quarter, with little revenue from cruise ship customers initially but a pickup later, including a large order for Professional Services from a cruise line. Freightliner operations continued to add new ships and use managed service offerings, increasing recurring revenue. There was increased demand from cloud clients for migration to the cloud group, with a dozen active cloud - based projects, and investment in people and processes for managed services. - HPP: In the fourth quarter of fiscal 2024, revenue was $0.4 million mostly from ARIA - based customers. Greg Fischer, an experienced sales veteran, redirected the AZT PROTECT sales effort. There was progress in building the market for AZT PROTECT with Rockwell Automation and distribution partners. A deal was announced with a Fortune 500 Electric Energy Producer for AZT PROTECT. Attended various trade shows, generated over 100 leads from Rockwell Automation Fair, and received industry awards for AZT PROTECT. - Financials: Q4 2024 revenue was $13 million compared to $15.3 million in Q4 2023. Full year 2024 revenue was $55.2 million compared to $64.6 million in the prior year. Gross profit for the fiscal year was $18.9 million or 34.1% of sales. Repurchased 2,800 shares of stock in Q4 2024 at a total cost of $34,000. Board approved a $0.03 per share quarterly dividend.

Technology Solutions business generated approximately $12.7 million in sales in the fourth quarter of fiscal 2024. For the HPP segment, revenue for the fourth quarter of fiscal 2024 was $0.4 million, mostly from ARIA - based customers. Recurring revenue increased to 17% of total sales compared to less than 5% just a couple of years ago.

• Optimistic about growing overall TS sales, especially the recurring revenue piece during the coming fiscal year. - Believes there is great potential for AZT PROTECT to see an upturn in sales in fiscal 2025 with the progress made in building market relationships and the momentum from trade shows and industry awards. - Board approved the payment of a $0.03 per share quarterly dividend to shareholders.

• Uncertainties in the market that may impact the accuracy of projections. - Risks associated with client internal changes such as people leaving, moving, or getting fired, which can affect the progress of projects. - The risk from continuous cloud updates on critical OT applications, as highlighted by the July CrowdStrike update failure.

Q: Joseph Nerges asked about proof - of - concepts for AZT PROTECT and the stock buyback.

A: Victor Dellovo said there were many proof - of - concepts ongoing, with some starting after the New Year and a lot of good conversations. Joseph Nerges also suggested that the company and the Board should be more aggressive in stock repurchasing.

Q: Will Lauber asked about the earnings of the AZT division if excluded and the recurring revenue goals.

A: Gary Levine said the AZT division was a loss but the TS division would be profitable. Victor Dellovo aimed for at least a 10% to 15% growth in recurring revenue year - over - year, if not more.

Q: John Crotty asked about partnerships and government projects.

A: Victor Dellovo talked about partner progress in Australia and with other large manufacturers at different stages, and mentioned that a government deal had moved forward and was hoped to come in within 90 days.