Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CSP Inc (CSPI, Financial) reported a 10% increase in service revenue, contributing to a 150 basis point improvement in gross margin percentage over the prior year.
- The AZT PROTECT product line has received significant industry recognition, winning multiple awards, including the 2024 Fortress Cybersecurity Award.
- The company has successfully expanded its partnership network, including a new integration partnership with Forescout Technologies and a reseller agreement with Worldwide Technology.
- CSP Inc (CSPI) has hired Greg Pysher, a seasoned sales veteran, to lead the AZT PROTECT business, which is expected to enhance sales team performance and drive growth.
- The Technology Solutions (TS) business continues to perform well, generating the majority of the quarter's revenue and supporting the development of AZT PROTECT.
Negative Points
- CSP Inc (CSPI) reported a decrease in revenue to $13.1 million from $17.7 million in the same quarter last year, attributed to the previous year's backlog conversion.
- The company reported a net loss of $185,000 for the quarter, compared to a net income of $2.5 million in the prior year.
- Integration of AZT PROTECT into the Forescout platform is expected to take four to six months, indicating a lengthy process before realizing potential benefits.
- The sales cycle for larger enterprise contracts remains long, which could delay revenue recognition from these opportunities.
- The company faces challenges in scaling its sales force and partner network, particularly in the operational technology (OT) space, due to resource constraints.
Q & A Highlights
Q: Can you provide an update on the integration of AZT PROTECT into the Forescout platform?
A: Victor Dellovo, President, Chief Executive Officer, Director: We haven't started the integration yet. Planning sessions are underway, and it could take four to six months for full integration and testing. The process involves collaboration between our team and Forescout's team to build all necessary APIs.
Q: Are there any other outside suppliers integrated into the Forescout platform, or is CSPi unique in this regard?
A: Victor Dellovo, President, Chief Executive Officer, Director: I didn't specifically ask Forescout about other outside suppliers. However, they were pleased with how our product complements their existing offerings without cannibalizing any of their current products.
Q: How has the CrowdStrike-induced Windows outage impacted your strategy with Rockwell and other partners?
A: Victor Dellovo, President, Chief Executive Officer, Director: The outage highlighted the urgency for solutions like AZT PROTECT. Rockwell has directed us to work with their partners, and we are building a food chain with them. Our unique approach to protecting applications at the core level has been well-received, and we are setting up partnerships and training materials to address these needs.
Q: What differentiates the IT version of AZT PROTECT from other solutions?
A: Victor Dellovo, President, Chief Executive Officer, Director: The IT version is designed to handle constant updates by scanning them for validity and requiring user approval before implementation. This approach prevents automatic updates from causing issues, as seen in the CrowdStrike incident, by allowing time for testing and approval.
Q: How does CSPi plan to expand its presence in the OT space, given its historical focus on IT?
A: Victor Dellovo, President, Chief Executive Officer, Director: We are building a network of partners and focusing on the OT space by hiring experienced personnel like Greg Pysher, who has 20 years of experience in the OT industry. Our strategy involves leveraging partnerships to build a sales force and create marketing and training materials tailored to the OT market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
