CSP INC /MA/ Q1 FY2025 earnings call

• Total revenue increased, with service revenue up 17% and gross margins expanded by 200 basis points. Earned $0.05 per diluted common share. Ended the quarter with over $30 million in cash and cash equivalents, and Board authorized $0.03 per share quarterly cash dividend.
• Technology Solutions business led with ~$15.2 million in sales, added second major cruise line order, and succeeded in ocean freight liner market with managed service offerings boosting recurring revenue.
• Increased demand for cloud-based service, service revenue grew 17% driving gross margin expansion. AZT PROTECT product line investment ongoing, signed new customers in OT markets, renewed post-contract support with large pharma company, and partnered with UFT for water treatment cybersecurity.
• 9 industry awards received by AZT PROTECT, benefited from CrowdStrike update failure recognition, and actively working with Rockwell distribution partners targeting middle market OT customers.

For the first quarter ended December 31, 2024, total revenue was $15.7 million, compared to $15.4 million in the prior year's first quarter. Service revenue was $4.7 million, representing 17% growth during the quarter. The Technology Solutions business generated approximately $15.2 million in sales. Gross profit for the three months ended December 31, 2024, was $4.6 million, which is 29.1% of sales.

• Counting on significant increase in AZT PROTECT revenue in 2025 and budgeting for it. Expecting Rockwell partners to generate sales through the year, with plans to fulfill all sales through Rockwell channels long-term.

• Forward-looking statements subject to uncertainties, risks, and other influences beyond the company's control, as discussed in annual and quarterly reports with the SEC.

Q: Could you provide an update on the AZT PROTECT upgrade and patent status?

A: Victor Dellovo stated they will announce the AZT PROTECT upgrade soon. Three patents issued, two more expected to issue by year-end, and two more submissions in 2026.

Q: What sales channels are AZT sales coming through and will Rockwell partners generate sales?

A: Victor Dellovo said current sales were from long-term work, Rockwell channels are new but they anticipate partners generating sales this year, aiming to fulfill all through Rockwell channels long-term. Also, no barriers to selling AZT overseas.

Q: Thoughts on AZT market penetration, share buyback?

A: Victor Dellovo mentioned actively looking at share buybacks to support the stock. Mike Price asked about using cash for buybacks, Gary Levine said they are taking a good look at purchasing more shares going forward. Victor Dellovo also stated counting on significant revenue increase in 2025 for AZT.