CSP Q3 Earnings Call Highlights

CSP Q3 Earnings Call Highlights

Key Points Revenue and profitability weakened: Fiscal Q3 revenue fell to $14.4 million from $15.4 million, while net loss widened to $846,000, or $0.09 per share. Hardware delivery times exceeding 200 days delayed revenue recognition, although the Technology Solutions backlog rose 65% year over year. AZT PROTECT is pursuing larger growth opportunities: CSPi is nearing the end of several 18- to 24-month enterprise sales cycles and is expanding OEM integrations, including a planned Acronis launch. The company reported a 100% renewal rate for customer sites reaching one-year renewals. Managed services momentum and financial flexibility continued: CSPi signed a six-year, seven-figure sports-team agreement and a three-year contract expected to generate mid-six-figure annual recurring revenue. The company ended the quarter with $24.7 million in cash, repurchased about 13,000 shares and maintained its $0.03 quarterly dividend.

CSP NASDAQ: CSPI reported lower fiscal third-quarter revenue and a wider net loss as longer hardware delivery times delayed the conversion of orders into revenue, while the company continued to build its managed services business and pursue larger enterprise opportunities for its AZT PROTECT cybersecurity offering. For the quarter ended June 30, 2026, revenue was $14.4 million, compared with $15.4 million in the prior-year quarter. Product revenue declined to $9.9 million from $10.2 million, while service revenue fell to $4.5 million from $5.3 million.

Chief Executive Officer Victor Dellovo said the Technology Solutions business performed near expectations and continued to generate order growth, but vendor shipment delays have limited revenue recognition. Hardware deliveries that had historically taken 30 to 60 days are now taking more than 200 days in many cases, he said. As a result, the company’s Technology Solutions backlog was 65% higher than it was a year earlier. Dellovo said the delays reflect broader supply constraints tied to demand for components including memory, hard drives and processors amid AI-related infrastructure buildouts.

Margins Improve Despite Revenue Decline Gross profit was $4.3 million, compared with $4.5 million a year earlier. However, gross margin improved to 30.1% of sales from 28.8% in the prior-year quarter. Product gross margin increased to 20.7% from 15.7% a year earlier. Service gross margin was 51.2%, compared with 53.9% in the prior-year period. Research and development expense rose 5% to $832,000, reflecting work on AZT PROTECT customer customizations and OEM integrations. Selling, general and administrative expense increased 3% to $5 million. CFO Gary Levine said the operating loss widened to $1.5 million from $1.2 million in the prior-year quarter, partly due to higher variable compensation in the Technology Solutions division and costs related to the sale of the company’s U.K. pension obligation to an insurance company. Net loss was $846,000, or $0.09 per share, compared with a net loss of $264,000, or $0.03 per share, in the fiscal 2025 third quarter. For the first nine months of fiscal 2026, CSPi reported revenue of $42.4 million, down from $44.3 million a year earlier. Gross profit increased to $13.5 million, or 31.9% of sales, from $13.2 million, or 29.9% of sales. The nine-month net loss was $491,000, or $0.05 per share, compared with net income of $100,000, or $0.01 per diluted share, in the comparable prior-year period.

AZT PROTECT Sales Effort Targets Enterprise and OEM Channels Dellovo said AZT PROTECT’s growth has been constrained by longer sales cycles for larger enterprise opportunities, though the company added customers and expanded deployments at existing accounts during the quarter. CSPi achieved a 100% ren...