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 $0.03 per share payable June 12, 2024, to shareholders of record on the close of business on May 24, 2024.
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 $13.7 million compared to revenue of $13.3 million for the fiscal second quarter ended March 31, 2023. Services revenue constituted $5.2 million of overall sales, an increase of 23% compared to services revenue of $4.3 million in the year-ago fiscal second quarter. Gross profit for the three months ended March 31, 2024, was $6.5 million, or 47% of sales, compared to $5.0 million, or 38% of sales, representing a 9% improvement as higher margin services revenue along with the high margin AZT sale fueled the growth. The Company reported net income of $1.6 million, or $0.16 per diluted common share for the fiscal second quarter ended March 31, 2024, compared to net income of $0.3 million, or $0.03 per diluted common share for the fiscal second quarter ended March 31, 2023. Earnings per diluted common share are retroactively adjusted for the effects of a stock split effected in the form of a 100% stock dividend which occurred during the second fiscal quarter of 2024.
The Company had cash and cash equivalents of $27.1 million as of March 31, 2024, providing it with the resources to invest in market awareness and growth initiatives for its products and services, including the transformative AZT offering.
Fiscal Year 2024 Six Month Results
Revenue for the fiscal six months ended March 31, 2024, was $29.1 million compared with revenue of $31.6 million in same prior year period. Gross profit for the fiscal six months ended March 31, 2023, was $10.6 million, or 36% of sales compared with $10.8 million, or 34% of sales, reflecting a more favorable product mix and benefiting from the higher margin services revenue in the 2024 fiscal second quarter. The Company reported net income of $1.5 million, or $0.16 per diluted common share in the fiscal six months ended March 31, 2024 compared with net income of $1.3 million, or $0.14 per diluted common share for the fiscal six months ended March 31, 2023.
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.
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