CSP Inc. Reports Fiscal First Quarter 2024 Operating Results; Success of ARIA Zero Trust PROTECT Generates Immediate Interest Among Fortune 50 Companies
- Secured a multi-million dollar contract with a global pharmaceutical company for ARIA Zero Trust PROTECT offering.
- Raised quarterly dividend to $0.05 per share, indicating confidence in sustained positive performance.
- Revenue for fiscal Q1 2024 was $15.4 million, down from $18.3 million in Q1 2023.
- Gross profit for Q1 2024 was $4.1 million, with a net loss of $(73,000).
- Cash and cash equivalents were $25.6 million as of December 31, 2023.
- CEO Victor Dellovo expresses optimism about the future growth potential of the company.
- Revenue declined from the previous year's Q1.
- Net loss reported for Q1 2024.
- Orders expected in Q1 were delayed to Q2.
- Gross profit margin decreased from the previous year's Q1.
Insights
The recent announcement by CSP Inc. regarding their fiscal first quarter results and the awarding of significant contracts, including a multi-million dollar deal with a global pharmaceutical company, presents several key financial considerations. Firstly, the increase in the quarterly dividend from $0.05 per share is a direct signal of management's confidence in the company's sustained positive performance and future cash flows. This decision is likely to be well-received by shareholders as it reflects a tangible return on their investment.
However, the reported net loss of $(73,000) for the quarter, compared to a net income of $961,000 in the previous year, warrants attention. While the company attributes this to the deferral of certain orders into the next quarter, it's crucial to monitor whether this is a one-off occurrence or indicative of underlying issues. The decrease in gross profit margin from 31.7% to 26.6% also suggests potential cost management challenges or pricing pressures that could impact future profitability.
From a balance sheet perspective, the slight increase in cash and cash equivalents suggests liquidity is being maintained. Yet, the rise in inventories from $2.5 million to nearly $7 million could imply either strategic stockpiling due to supply chain concerns or potential issues with inventory turnover. Close scrutiny of subsequent quarterly results will be necessary to determine the trajectory of these financial health indicators.
The cybersecurity industry is witnessing a surge in demand for Zero Trust solutions, as organizations intensify their efforts to mitigate cyberattack risks. CSP Inc.'s ARIA Zero Trust PROTECT offering, which has garnered a multi-million dollar contract with a Fortune 50 pharmaceutical company, indicates a robust product-market fit and a competitive edge in this growing segment.
The partnership with a leading cybersecurity advisory firm to drive adoption further underlines CSP Inc.'s strategic approach to market penetration. The company's focus on small to large scale companies and organizations with Operational Technology (OT) environments is particularly astute, given the increasing threat landscape in these sectors.
It's imperative to contextualize the potential of the ARIA Zero Trust PROTECT offering within the broader cybersecurity market. The global Zero Trust security market size is projected to grow significantly and CSP Inc.'s early successes could position them favorably within this expanding market. Continuous innovation and responsiveness to market needs will be key determinants of their long-term success in this sector.
The renewal of a multi-million dollar, five-year service contract with a South Florida higher education institution is indicative of CSP Inc.'s solid footing in the education sector. The fact that this contract comes with an additional five-year option and at higher renewal prices speaks to the perceived value and quality of CSP Inc.'s services.
Higher education institutions are increasingly reliant on technology solutions for administrative efficiency and educational delivery. CSP Inc.'s ability to secure and renew such contracts suggests a strong alignment with sector-specific needs and a reputation for reliability. Given the critical role of technology in educational settings, CSP Inc.'s performance in this sector could serve as a stable revenue stream and a platform for growth, especially if they can leverage this success to secure additional contracts in the education sector.
- Significant Business Momentum of AZT Demonstrated by Recently Awarded Multi-Million Dollar Contract with a Global Pharmaceutical Company
- Pace and Number of AZT Evaluations is Increasing as Organizations Seek to Protect Enterprises from Global Cyberattack Threats
- Quarterly Dividend Raised to
$0.05 Per Share, Demonstrating Confidence of Sustained Positive Performance
LOWELL, MA / ACCESSWIRE / February 14, 2024 / CSP Inc. (NASDAQ:CSPI), an award-winning provider of security and packet capture products, managed IT and professional services and technology solutions, today announced results for the fiscal first quarter ended December 31, 2023. The Company also announced that the Board of Directors declared and raised the quarterly dividend to
Recent Achievements and Operating Highlights
- Secured multi-million dollar contract for ARIA Zero Trust PROTECT offering with a global pharmaceutical company, increasing the Company's visibility among the Fortune 50 companies
- Continued enthusiasm of ARIA Zero Trust PROTECT offering remains high and continues to generate growing interest among small, mid and large scale companies and organizations with OT environments
- Awarded (renewal) a multi-million five-year service contract to provide IT managed services to south Florida higher education institution providing two- and four-year degrees to the community of South Florida
- Partnered with a leading cybersecurity advisory firm and reseller, which serves around 6,000 companies worldwide, to drive greater adoption of ARIA Zero Trust PROTECT
- Continues to maintain a robust balance sheet, enabling the Company to raise the quarterly dividend and leverage its resources to finance certain large customer orders at preferable interest rates
"We are excited with the early success and demand of the ARIA Zero Trust PROTECT offering, surpassing our initial expectations and culminating in the first multi-million dollar contract with a global pharmaceutical corporation," commented Victor Dellovo, Chief Executive Officer. "We believe the initial achievements of the AZT offering, coupled with high customer satisfaction, are greatly enhancing our reputation and allowing us to compete at the highest level, and among some of the largest companies and organizations in the world as they seek to protect their enterprises from cyberattack threats. We continue to believe this is a significant and game-changing development for the HPP business and remain cautiously optimistic as we move through the fiscal second quarter and second half of the year. Our objective is to continue to build the sales funnel and prioritize leads, which is expected to increase exponentially as we host and attend more industry events to elevate the capabilities of the AZT offering. Additionally, the continued partnership with leading resellers enables us to leverage their knowledge, expertise and reach to further accelerate the adoption of AZT.
We also continue to be pleased with the overall performance of the Technology Solutions business as it secured a five year multi-million dollar managed services renewal contract with a south Florida college, plus an additional five-year option, at prices higher than the renewal.
I believe these recent accomplishments, across both businesses, and the Board's decision to increase the quarterly dividend demonstrate that we remain positioned to achieve far greater success as the representative dollar value of the new business pipeline is higher today compared to any other time in our Company's history."
Fiscal 2024 First Quarter Results
Revenue for the fiscal first quarter ended December 30, 2023, was
The Company had cash and cash equivalents of
Conference Call Details
CSPi Chief Executive Officer Victor Dellovo and Chief Financial Officer Gary W. Levine will host a conference call at 10:00 a.m. (ET) today, February 14, 2024, to review CSPi's financial results and provide a business update. To listen to a live webcast of the call, the event link is https://www.webcaster4.com/Webcast/Page/2912/49904. Individuals also may listen to the call via telephone, by dialing 888-506-0062 or 973-528-0011and use the Participant Access Code: 606441 when greeted by the live operator. For interested parties unable to participate in the live call, an archived version of the webcast will be available for approximately one year on CSPi's website.
| CSP INC. AND SUBSIDIARIES CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) | |||||||
| December 31, 2023 | September 30, 2023 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 25,611 | $ | 25,217 | |||
Accounts receivable, net | 11,722 | 12,955 | |||||
Financing receivables, net | 7,497 | 7,171 | |||||
Inventories | 6,963 | 2,542 | |||||
Other current assets | 1,824 | 2,479 | |||||
Total current assets | 53,617 | 50,364 | |||||
Financing receivables due after one year, net | 2,453 | 4,224 | |||||
Cash surrender value of life insurance | 5,390 | 5,356 | |||||
Other assets | 5,967 | 5,960 | |||||
Total assets | $ | 67,427 | $ | 65,904 | |||
Liabilities and Shareholders' Equity | |||||||
Current liabilities | $ | 16,982 | $ | 15,659 | |||
Pension and retirement plans | 1,227 | 1,251 | |||||
Other non-current liabilities | 2,744 | 2,846 | |||||
Shareholders' equity | 46,474 | 46,148 | |||||
Total liabilities and shareholders' equity | $ | 67,427 | $ | 65,904 | |||
| CSP INC. AND SUBSIDIARIES CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) | ||||||||
| Three months ended | ||||||||
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
Sales: | ||||||||
Product | $ | 11,407 | $ | 14,221 | ||||
Services | 3,968 | 4,123 | ||||||
Total sales | 15,375 | 18,344 | ||||||
Cost of sales: | ||||||||
Product | 9,228 | 10,771 | ||||||
Services | 2,052 | 1,756 | ||||||
Total cost of sales | 11,280 | 12,527 | ||||||
Gross profit | 4,095 | 5,817 | ||||||
Operating expenses: | ||||||||
Engineering and development | 700 | 836 | ||||||
Selling, general and administrative | 3,738 | 3,617 | ||||||
Total operating expenses | 4,438 | 4,453 | ||||||
Operating (loss) income | (343 | ) | 1,364 | |||||
Other income (expense), net | 283 | (270 | ) | |||||
(Loss) income before income taxes | (60 | ) | 1,094 | |||||
Income tax expense | 13 | 133 | ||||||
Net (loss) income | $ | (73 | ) | $ | 961 | |||
Net (loss) income attributable to common shareholders | $ | (73 | ) | $ | 906 | |||
Net (loss) income per common share - basic | $ | (0.02 | ) | $ | 0.21 | |||
Weighted average shares outstanding - basic | 4,432 | 4,295 | ||||||
Net (loss) income per common share - diluted | $ | (0.02 | ) | $ | 0.21 | |||
Weighted average shares outstanding net income - diluted | 4,432 | 4,328 | ||||||
About CSPi
CSPi (NASDAQ:CSPI) operates two divisions, each with unique expertise in designing and implementing technology solutions to help their customers use technology to success. The High Performance Product division, including ARIA Cybersecurity Solutions, originated from supporting initiatives for the Department of Defense and Western intelligence agencies related to network monitoring, data protection, and intelligence initiatives. This focused mindset now results in foolproof data protection, enterprise wide. Our ARIA Software Defined Security solutions set provides enhanced network security, as well as accelerating incident response capabilities, while our Myricom nVoy Series appliances provide automated breach identification and notification, enabled by the 10G dropless packet capture inherent in our Myricom intelligent adapters. CSPi's Technology Solutions division helps clients achieve their business goals and accelerate time to market through innovative IT solutions and professional services by partnering with best-in-class technology providers. For organizations that want the benefits of an IT department without the cost, we offer a robust catalog of Managed IT Services providing 24×365 proactive support. Our team of engineers have expertise across major industries supporting five key technology areas: Advanced Security; Communication and Collaboration; Data Center; Networking; and Wireless & Mobility.
Safe Harbor
The Company wishes to take advantage of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995 with respect to statements that may be deemed to be forward-looking under the Act. Such forward-looking statements may include but are not limited to, we continue to believe the initial success with ARIA Zero Trust PROTECT is a significant and game-changing development for the HPP business, our objective is to continue to build the sales funnel and prioritize leads, which is expected to increase exponentially as we host and attend more industry events to elevate the capabilities of the AZT offering, we remain positioned to achieve far greater success as the representative dollar value of the new business pipeline is higher today compared to any other time in our Company's history.
The Company cautions that numerous factors could cause actual results to differ materially from forward-looking statements made by the Company. Such risks include general economic conditions, market factors, competitive factors and pricing pressures, and others described in the Company's filings with the Securities and Exchange Commission ("SEC"). Please refer to the section on forward looking statements included in the Company's filings with the SEC.
CONTACT:
CSP Inc.
Gary Levine, 978-954-5040
Chief Financial Officer
SOURCE: CSP Inc.
View the original press release on accesswire.com
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