CSP Inc. Reports Fiscal Second Quarter 2024 Operating Results; 23% Growth in Services Revenue Drives Gross Margin Percentage Expansion to 47% and Nearly Five-Fold Increase in Net Income
CSP Inc. (NASDAQ:CSPI) reported a net income of $1.6 million for the fiscal second quarter of 2024, with services revenue growing by 23% to $5.2 million, contributing to a gross margin expansion to 47%. The company also declared a quarterly dividend of $0.03 per share. Recent achievements include winning global awards for its cybersecurity products and expanding its market presence, with a focus on the AZT offering. The company's balance sheet remains strong, with cash and cash equivalents of $27.1 million, allowing for continued investment in growth initiatives.
Services revenue grew by 23% to $5.2 million, contributing to a gross margin expansion to 47% in the fiscal second quarter of 2024.
Net income for the quarter reached $1.6 million, a nearly five-fold increase from the previous year.
The company declared a quarterly dividend of $0.03 per share, showcasing confidence in its financial performance.
Recent awards and achievements include winning global cybersecurity product awards for the AZT offering and expanding market presence to target mid-market and Fortune 500 customers.
The company's strong balance sheet with $27.1 million in cash and equivalents allows for continued investment in growth initiatives and market development for its products and services.
Revenue for the fiscal six months ended March 31, 2024, decreased to $29.1 million compared to $31.6 million in the same period the previous year.
In the fiscal second quarter of 2024, product revenue was slightly down compared to the previous year, impacting the overall revenue growth.
Gross profit margin for the fiscal six months ended March 31, 2024, was 36% compared to 34% in the prior year, reflecting a slight decrease in margin despite higher margin services revenue.
Insights
Analyzing CSP Inc.'s fiscal second quarter results, a five-fold increase in net income and 23% growth in services revenue are key highlights, marking a significant uptick in profitability. The gross margin expansion to 47%, up from 38% in the previous year, aligns with a strategic shift toward higher-margin services and the successful sale of the AZT cybersecurity product. Moreover, the declaration of a quarterly
From a balance sheet perspective, CSP Inc.'s cash and cash equivalents stand robust at
Within the cybersecurity space, CSP Inc.'s strategic focus on their AZT PROTECT is catching the industry's eye. The multi-million dollar contract with a global pharmaceutical company signifies the product's credibility and the potential for large-scale enterprise adoption. The recognition in the form of industry awards and a published case study reaching over 50,000 subscribers can generate significant market awareness, potentially positioning AZT as a front-runner in the cybersecurity solutions sector.
The emphasis on direct sales strategies and partnerships, such as that with Rockwell, are likely to enhance AZT's market penetration, catering not just to Fortune 500 companies but also to the mid-market segment which represents a substantial growth vector. This dual approach to targeting both tiers of the market could result in a diversification of revenue streams and a fortified market presence. The impact of these developments has yet to fully reflect in financials, but the proactive market engagement and expanding sales force are indicative of a strategic blueprint for capturing a larger share of the cybersecurity market.
ARIA Zero Trust PROTECT ("AZT PROTECT™" or "AZT") Launch Broadens to Address Mid-Market Opportunity While Fortune 500 Pipeline Increases; Global Pharmaceutical Company Signs Multi-Million Dollar AZT Contract
LOWELL, MA / ACCESSWIRE / May 8, 2024 / CSP Inc. (NASDAQ:CSPI), an award-winning provider of cybersecurity AI-driven solutions (AZT), security and packet capture products, managed IT and professional / cloud services and technology solutions, today announced results for the fiscal second quarter ended March 31, 2024. The Company also announced that the Board of Directors declared a quarterly dividend of
Recent Achievements and Operating Highlights
- Services revenue and high margin AZT sale contributes to the expanded gross margin and net income of
$1.6 million for the fiscal second quarter - Recently published case study of AZT PROTECT™ in The Journal, an award-winning publication from Rockwell Automation and Our PartnerNetwork™, reached a subscriber base of over 50,000. The Journal educates the industrial automation market on leading-edge methods, trends, and technologies
- CRN®, a brand of The Channel Company, named CSPi Technology Solutions to its Managed Service Provider (MSP) 500 list in the Security 100 category for 2024.
- Continued strong balance sheet allows the company to rapidly invest in AZT PROTECT™ market development initiatives
- ARIA Cybersecurity Wins Global Infosec Cybersecurity Product Award for AZT PROTECT at RSA
- ARIA Cybersecurity Wins Prestigious Globee Cybersecurity Product Award for AZT PROTECT
"Our business continued to operate at a high level during the quarter, and across the board we are building a pipeline that is in line with, or well above our internal plans. As a result, we continue to execute a strategy designed to generate sustained long-term growth and profitability," commented Victor Dellovo, Chief Executive Officer. "The consistent performance of our Technology Solutions (TS) business and robust balance sheet is enabling investment in certain sales and marketing initiatives to generate the desired growth outcomes for the High Performance Products (HPP) business, mainly with the AZT offering."
"We believe our multi-pronged market awareness strategy for the AZT offering is demonstrating the need and attractiveness to large Fortune 500 global brands. The effort has resulted in landing a major AZT customer - a global pharmaceutical company. With a dedicated sales team focused on this enterprise segment, we recently added three sales representatives to target mid-market companies while we build partnerships with organizations addressing both markets. Earlier this month, we also achieved another significant milestone with our partner Rockwell, and the publication of an AZT PROTECT™ deployment case study within a Fortune 500 company. This article published in The Journal is distributed to over 50,000 subscribers - readers that heavily rely on knowing the latest and best solutions to meet today's cybersecurity threats and challenges.
As we move forward, we believe the focus of our direct sales team and leveraging our new and expanding partnerships is going to significantly raise the profile of the AZT offering. Despite being less than a year removed from the launch, we are building traction in the market and the level of enthusiasm remains high, as does the new business lead pipeline. We are optimistic about the opportunities we have with AZT and look forward to the second half of our fiscal year."
Fiscal 2024 Second Quarter Results
Revenue for the fiscal second quarter ended March 31, 2024, was up slightly to
The Company had cash and cash equivalents of
Fiscal Year 2024 Six Month Results
Revenue for the fiscal six months ended March 31, 2024, was
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, May 8, 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/2912/50580. Individuals also may listen to the call via telephone, by dialing 77-545-0523 or 973-528-0016 and use the Participant Access Code: 533105 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 CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
| March 31, 2024 | September 30, 2023 | |||||||
| (unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 27,119 | $ | 25,217 | ||||
Accounts receivable, net | 12,780 | 12,955 | ||||||
Financing receivables, net | 7,625 | 7,171 | ||||||
Inventories | 1,478 | 2,542 | ||||||
Other current assets | 1,860 | 2,479 | ||||||
Total current assets | 50,862 | 50,364 | ||||||
Financing receivables due after one year, net | 2,178 | 4,224 | ||||||
Cash surrender value of life insurance | 5,477 | 5,356 | ||||||
Other assets | 5,683 | 5,960 | ||||||
Total assets | $ | 64,200 | $ | 65,904 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities | $ | 12,535 | $ | 15,659 | ||||
Pension and retirement plans | 1,203 | 1,251 | ||||||
Other non-current liabilities | 2,215 | 2,846 | ||||||
Shareholders' equity | 48,247 | 46,148 | ||||||
Total liabilities and shareholders' equity | $ | 64,200 | $ | 65,904 | ||||
CSP INC. AND SUBSIDIARIES
'CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
| Three months ended | Six months ended | |||||||||||||||
| March 31, | March 31, | March 31, | March 31, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
Sales: | ||||||||||||||||
Product | $ | 8,458 | $ | 8,988 | $ | 19,865 | $ | 23,209 | ||||||||
Services | 5,248 | 4,281 | 9,216 | 8,404 | ||||||||||||
Total sales | 13,706 | 13,269 | 29,081 | 31,613 | ||||||||||||
Cost of sales: | ||||||||||||||||
Product | 5,416 | 6,580 | 14,644 | 17,351 | ||||||||||||
Services | 1,812 | 1,699 | 3,864 | 3,455 | ||||||||||||
Total cost of sales | 7,228 | 8,279 | 18,508 | 20,806 | ||||||||||||
Gross profit | 6,478 | 4,990 | 10,573 | 10,807 | ||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and development | 726 | 858 | 1,426 | 1,694 | ||||||||||||
Selling, general and administrative | 4,518 | 3,895 | 8,256 | 7,512 | ||||||||||||
Total operating expenses | 5,244 | 4,753 | 9,682 | 9,206 | ||||||||||||
Operating income | 1,234 | 237 | 891 | 1,601 | ||||||||||||
Other income (expense), net | 489 | 155 | 772 | (115 | ) | |||||||||||
Income before income taxes | 1,723 | 392 | 1,663 | 1,486 | ||||||||||||
Income tax expense | 135 | 71 | 148 | 204 | ||||||||||||
Net income | $ | 1,588 | $ | 321 | $ | 1,515 | $ | 1,282 | ||||||||
Net income attributable to common shareholders | $ | 1,482 | $ | 302 | $ | 1,417 | $ | 1,205 | ||||||||
Net income per common share - basic | $ | 0.16 | $ | 0.03 | $ | 0.16 | $ | 0.14 | ||||||||
Weighted average shares outstanding - basic | 9,070 | 8,782 | 8,967 | 8,683 | ||||||||||||
Net income per common share - diluted | $ | 0.16 | $ | 0.03 | $ | 0.15 | $ | 0.14 | ||||||||
Weighted average shares outstanding net income - diluted | 9,455 | 8,924 | 9,366 | 8,789 | ||||||||||||
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, recognizes that better, stronger, more effective cybersecurity starts with a smarter approach. ARIA's solutions provide new ways for organizations to protect their most critical assets-they can shield their critical applications from attack with our AZT solution, while monitoring internal traffic, device-level logs, and alert output with our ARIA ADR solution to substantially improve threat detection and surgically disrupt cyberattacks and data exfiltration. Rounding out the portfolio, Aria's AZT Gateway Software allows us to interrogate network packets at 100mbps line-rate to enforce forwarding and capture policies on the fly. Customers in a range of industries rely on our solutions to accelerate incident response, automate breach detection, and protect their most critical assets and applications-no matter where they are stored, used, or accessed. 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 are building a pipeline that is in line with, or well above our internal plans. As a result, we continue to execute a strategy designed to generate sustained long-term growth and profitability and we are optimistic about our opportunities to sign additional AZT customers during the second half of our fiscal year.
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
FAQ
<p>What was CSP Inc.'s net income for the fiscal second quarter of 2024?</p>
CSP Inc. reported a net income of $1.6 million for the fiscal second quarter of 2024.
<p>How much did services revenue contribute to the gross margin expansion in the fiscal second quarter of 2024?</p>
Services revenue grew by 23% to $5.2 million, contributing to a gross margin expansion to 47% in the fiscal second quarter of 2024.
<p>What was the percentage increase in net income for CSP Inc. compared to the previous year?</p>
CSP Inc. saw a nearly five-fold increase in net income for the fiscal second quarter of 2024 compared to the previous year.
<p>How much was the quarterly dividend declared per share by CSP Inc. for the fiscal second quarter of 2024?</p>
CSP Inc. declared a quarterly dividend of $0.03 per share for the fiscal second quarter of 2024.
<p>What was the revenue for the fiscal six months ended March 31, 2024, compared to the same period in the prior year?</p>
Revenue for the fiscal six months ended March 31, 2024, was $29.1 million compared with revenue of $31.6 million in the same prior year period.
