CSP (CSPI) 11 Aug 212021 Q3 Earnings call transcript

Good day, everyone, and welcome to today's CSPi Third Quarter Fiscal Earning Conference Call. At this time, all participants are in a listen-only mode. Later we will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note today’s call is being recorded. And it is now my pleasure to turn the conference over to Michael Polyviou. ahead. go Please

Dellovo, that Hello, are Statements is and to regarding well business Keith. for plan, XX, thank identify questions. as laws. for as we continue Financial by open statements. the is you With forward-looking Gary then Officer; will, be project, Thank CSPi's on will CSPi's conclude Levine, identified CSPi's everyone, may, their estimate believe, fiscal us Chief expect, to securities term Victor forward-looking historical call today today's call review on not similar statements After June call Chief made third joining Executive management me and federal Victor The you, Officer. the expressions the may words and and CSPi's Gary intended intend, anticipate, facts quarter the company's XXXX. as in are remarks, ended opening

Securities are performance the statements are Factors control should beyond the and The future Risk many Form filed quarterly on are not a be the a influences, but you read or Exchange the the the limited statements company the and as and based. the the, Forward-looking discussed of which results of Form uncertainties, and company's of number in statements company's are to, report not the segment XX-Q annual to Factors include, other of these that XX-K Commission. and projections upon, and with reflect of events affect that may section uncertainties the about may on current report or and the influence risks accuracy performance which cautions company's expectations results. subject that statements risks future guarantee

obligation events. and as CSPi statement, otherwise on no based the forward-looking future new belief please Executive to statements good whether faith with With events forward-looking undertakes made update the Victor over in their call this of or that, management's the Chief turn the or Dellovo, after cautionary thereof. statements and are of any by ahead. result are go entirety future respect qualified statements the information a Victor, Officer. to time All date are publicly to those as revise at information, I'll statements time available Forward-looking

Thanks, Michael, and good morning everyone.

first the as pandemic, engaged we of the time sales engineering since developments. For teams positive emergence several our fully the achieved and were COVID-XX

quarter a company chain For we of the stellar And the TS have higher Technology issue which had supply example, increase would likely its quarters Solution, year-over-year it reported our a total of given us well certain and chronical Solutions delaying in sizable revenue. one revenue, for considerable been performance not division best have ever. orders, had another had would

and in larger their us XX% XX% multiyear MSP emerge And grow full high-margin as Additionally, products with we we higher-margin grew complement the including Today service Security SDS The named XXX To pandemic and that Channel of Tech our company recent year-over-year I accolades information believe North offerings enabled a will industry Company top response applications managed more The compared won migration America May, and businesses the in revenue and services. maintenance purchasing bottom brand cyberattack awards Also third to gross XX% recognized success. approach magazine. its to XXX forward-thinking a of announced consecutive have third-party is simultaneously net annually in ARIA with Cyber electronic a the quarter. represent XXXX of detection leading of will Defense year-ago to CRN, demonstrated industry's category. In and in growth. revenue Magazine, two to approximately which the this services these stronger leading contributing the solution factors lines, to believe Managed the continue security to products two formable margin of list, from seventh on CSPi May a the agreements. providers while smaller across our report and list and newer for converting to year-over-year customers habits, from continued services fact Service by revenue innovative be quarter our our automated customers to Provider continued the

active operation award-winning costs. cybercriminal and finds our which centers of launching single for moment including zero-day a they is automatically network; first and solution, most attacks people the occurs. In and importantly without threats platform all equipment typical gain AI-driven before types become The security ARIA on stops the the harm ADR organizations

solution a ADR IT ARIA ARIA on-premise other provides for faster of little training. cybersecurity resources the centers, remote and coverage service full devices the and by no data anywhere fraction a at As infrastructure and Unlike environments, can ADR security threat cloud with tools times result be stops XX attacks operated or cost.

network-borne visibility is network typical complete second enables network an lateral ARIA it deployed Packet. enriched performance. with this the including and watches unmonitored as It application, organization data have our traffic, Packet communications ADR used -- or all SIM unmonitored conjunction patents analyst The analytic SOCs leveraging our ARIA to detect, which security ARIA tools threats. generating including working traffic, Intelligence solution communications for award the stop lateral such into watches typical organization's ADR in

team to was revenue the reflects practice our continues perform as a quarter, quarter our result managed service the solid our $XX.X achievement as TS to achieve continues This million, another phenomenal well. For objectives.

our tighter a chance a engineers to a date, with any want did I have Of during a contract fourth despite customer we the over solutions. to underscores sign because issues further that have quarter with not skilled performance this note, we are be This a we will optimism the and demonstrates companies other make winning improvements, with We the for just to them these winning making, could for part offer months, recruiting in progress economic differentiator been piece into fiscal win the run us engineers. CSPi, our year. market business further a They and positive record multimillion-dollar culture. of business closed had to in positioning users, perhaps, also And It succeed pursuing XXXX. next and of coming compete commence not and to XX,XXX-plus And of engineers be we new over cloud-based a a penetrating market in we this QX. a we with difference. this for the from will conceivably Mexico And continued believe for we new of potential amount as customer signed we competitive any been revenue had well up in business. for

me to Now pivot cruise let line. the

cruise you and the As to complete it directly task. pandemic industry impacted our has aware, the are ability access estimated to our gain by ships and

the and encouraging QX level today activity year the is outlook However, than far was better ago. a

deal validates our enable throughout when staffing has it arises. the our as which to decision Our pipeline us quickly scale levels to maintain increased, would the need

However, it situation, because this careful fluid requires remains a monitoring.

will necessary to we assignments, safety. team's ensure if the So adjust

longer continued taking to expand our and UCaaS, mostly longer the customers' also timing deals as of expiring. due We revenue to existing contracts are close transactions cycle from to sales smaller larger

market we and performance a of by in land a believe expected with than Myricom offset us cut I as allows the before or I a was superior am This the did royalty fiscal award-winning to niche it's performance division. materialize of a a customer, product opportunity. as we had pleased we not expect program, only HPP quarter. to the However, we current TS. out Revenue because this revenue royalty which big time the while quarter fourth to of High revenue was for matter slower as $X now as multibillion-dollar Performance have in E-XD Products the record expected million performed related anticipated

It outlook as to our the of of level forward, it move gives It for business interest platform contributes considerable, activity during surely to the heavily success award tremendous a is ARIA the for HPP However, us continues comfort greater and become CSPi. as star award-winning garner HPP our we is will the high. because quarter.

we developing messaging As you spent yielding momentum. devoted resources and know, believe is the our we refine educate to positive the considerable ARIA market I time and have

example, XX% client several our in advanced For the or later three over from the sales currently over in TS-based opportunities these we dozen stages. have with of negotiating funnel, including

quarter. share an Let development you also important with the during me

with We monthly revenue onboarding TS business represent recurring the business. of MSP. and the demonstrating our it integration this for from will process pipeline and the of originating HPP have ARIA the commence is the of MSP The ADR fine-tuned the TS TS the ADR current from clearly in synergies business customers with leads quarter. will between possibilities HPP ARIA and Moreover, fourth fiscal several

first during third of two to revenue three with fiscal and commencing ARIA plan second during Additionally, fiscal respectively. XXXX the quarter customers, we signed install quarters and additional QX in QX XXXX, which recurring this we of ADR

are revenues. monthly reminder each a are As of X-year arrangements generating these

of I it's will changer us in we revenue So, balance to I the the that a overview a annualized to pursue we achieve point begin this and of tip and the an quarter validates just revenue waiting third millions. provide With done To the those acquisition. our be iceberg complemented could our business believe strengthens business patiently as believe to provide be and by products with two best coming we and our supply now expect and to ambitions, that future. sheet when to Gary This a chain that to each while capitalize ask the have services best-in-breed financial HPP the scale and and have of that a strengthening up performance. foreseeable propel quite dynamic the as products by everything conviction continue for business talent for CSPi brief posed on services. superior on opportunity plans with contributing growth managing driver ARIA issues performing in of gross rapidly their set businesses a the opportunities fiscal a unique will will speaking abilities summarize growth Broadly I future. for a HPP businesses gives it business. TS while we these resources significant continue long-term to margin gives to COVID-XX, at game

Thanks Victor.

As mentioned in his revenue million. remarks was Victor quarter $XX.X third opening our

XX.X% third million staff had out year-over-year this to increased managed a XX.X% visits the interaction. fiscal in gross $XX Network had experienced of Operations of or year added point year's ago or for sales sales While sales that with the quarter. still want million we $X.X compared COVID-XX customer QX we with still especially of I our limitations our as and We also imposed report cost slight to in profit of XX% service to decline Center. by

pandemic improvement We continue as service business. higher-margin of gross mix we achieved a margin have through sell year-over-year the to

up this as to Our the larger higher-margin in near maintain goal mid line. products margin short-term to become the top and moving the gross annual XXs high to is an contributors and

engineering to increase quarter fiscal higher in the open development period. year expenses where to is $XXX,XXX positions. filled engineering the compared a and headcount due we in Our for third were The $XXX,XXX ago

mentioned quarter as labor coming tight we Victor market increased expenses this we compete may engineers, see As the is so earlier talent. for in a qualified for

were ended September $X.XX that a per proceeds share SG&A on fiscal addition a flat the as the the QX. our including throughout Our $XXX,XXX $XX.X suspension program fiscal the XXXX, robust equivalents million $XXX,XXX a quarter stopping believe of share per loss buyback cash increase net enabled year-ago during of third of measures quarter preserve cash a and to of with XXXX. We with pandemic. compared to our maintain implemented quarterly XXXX. of essentially cash QX third of balance loan June We cash to sheet PPP slight with XX, expenses stock loss our in XXXX or million XX, cash in the reported the net us equivalents the the in dividend or compared $X.X third $X.XX we and for We and quarter and

it We that With such will future will to preservation cash maintain the resume until operations. prudent for that similar turn to take over your the businesses or the I normal foreseeable operator questions. economy time posture the and

from question Please Joseph [Operator with go Segren Instructions] Investments. And Nerges a take we'll ahead.

guys. are morning you Good today? How

Joe. morning, Good

in the this your chain or problem? that Has question factor of extent to off a supply top Victor quarter. slow going the supply we having resolved are this still quick issues supply issues an you into been a were Real is, mentioned quarter statements that -- that chain were

products Yes. that supply chain. weeks XX on slow some brands just that some weeks XX We're We're we a taking still represent. the major on having to it's of

rolling that hoping -- at in we're way quarter QX, closed So, like backlog. in closing we're in we what ship we right it's what QX of like That's can a looking we're kind we QX, and it now. closed the

volume supply? is last quarter that have in would the the quarter you than into falling had current essentially the So

Yes, correct.

Okay.

You Is revenue you're revenue and the E-XD said some in that quarter third there's royalty possibly it? in no expecting E-XD the fourth quarter.

Correct.

Okay.

points a vital presentation transitioning transferring your the offering. on product that's ADR I that made the line On you're guess the Technology to about you ADR Solutions. service

Correct.

Doesn't that managed not? what a security we're open Is in customers provider We're series additional acting service security that's of managed as Florida? service exactly software. the utilizing customers providers, it up whole earlier potential a doing in for our the

have Correct. that infrastructure, MSP contracts customers ADR. to rest for plus Yes, manage the closed yes. both managed the the of signed And this quarter we've their

Okay.

Yes. were multiple the there's So of each contracts that customers. signed for

other understand could like utilizing service managed is the I are we -- question Florida? pursuing just service the question country that that. in are is, the the the across providers be security But But we

there's talking if that to that to want have into someone right they them. -- has investment they We're it. to to it, of have But get an they monitor some people

it's So, get about up. them to to at it right? it the have monitors, a where So talking country. up because, set for they opening that's in purchasing in not takes business other them helping the of California areas that whole little only longer looking product talent have It's or and talking us the the about them unit a we're them

division decision So, these their companies opening [Indiscernible]. to CEO, of up new make a that's current the business a about in has CFO course, inside

not they're monitoring... not currently. that They're essentially doing So

be the They security giving firewalls, could monitoring The SIEM but not a that customer have as the they an they're offering. may side.

going wireless. in third and several with the that's the you maybe, the point and and could and One you've with color emphasizing area that and that such; more forward, calls services, well three obviously doing down managed made Okay. times we're is previous on which that is ARIA cybersecurity add the Florida; areas -- we're this

see several that down in going What times. some going the you the gives do that for emphasized hope You've that road here you future? area

of done biggest big one been to Aruba's part we're for where Southeast that's what a long partner. Well, we've time a of

not but talent sell been different the toX. offering services sizes service sell. and have We expertise only have different product, wireless it. profit we've the also offering companies We help to also the managed And to install the a

to have with product where basically product, the So the the they doesn't just customer buy rent the services.

as the have, that it I'd running offering to all wireless, up probably we MSP. care security that, of don't have a about that sure dozen for and opening already, wireless they half want we making where inside started and we worry to them. our take the getting it and So of say, any accounts all the an And under various sizes, to up of on

into decade, wireless for that So right, but also. we've over doing offering brought now a of been piece it years, we MSP the

us allowing suppliers. our obviously, our from, of to, the engineering let's expertise because is advance product And we're some buying say,

Correct.

from separates assume, I into, putting we're competitors. us some that to our engineering the of But some extent

of companies. a that gives different we are and It a to out There's represent, off that Yes. on them people allows couple -- there NACs. it of networks come different product

expertise know There mention We are. in some would doing institutions. the actually but with We're some are have their of that all area. the that. of business large engineering we're who can't you hospitals large and doing I names, they financial that

all wireless the has along to them, the the difficult. alone on for wireless NAC right get with the up getting it's who of have the we're the you setting on -- that why stuff right, name access around wireless, But And organizations, and the because credentials we're to to in the different So doing the work and what NAC security not policies, the all school wireless. at. really segments those we and network that's is the that, we're it, engineering pieces that's systems, certain like good

Okay, Could to -- them put there for have some me, proposals to of of it much that time a got the like great. much, you HPP out of way, you it's do the of this matter Well, there, more. more sounds it a some And possibilities have just out are let's close. these

demoed is that's get accounts closing all is Report at those you Forrester? big pipeline The right? the you we've How you some wants we're some customers the be that some up of been that the Well, any time, had it. the have that account building there's that to. was rate a references? nobody you recently, first did the is so great, -- important, Yes. question we're issue, that companies have And No, POC. your do not. the in trust a And They didn't to referenceable Gartner we're referenceable we a that are distribute do it all on and that actually the to say right? or product -- now one, a list we're Well, We on until have side. off to because to -- with asked So it. you're business but They steady was any. getting MSP talking bought able are growing we're

That's great. But yes hopefully, you're getting sounds fine. doing and just a it stand. matter It's some all Okay, my more -- volume from like of

it. That's

you. too future. lot Thanks not -- a Thank distant guys.

Yes.

Joe. Thanks, Yes.

does it or floor have further to for I'll any And questions. Victor Dellovo closing appear, additional return Instructions] [Operator the remarks. we no

you. Thank

As always, want I to -- our thank stakeholders

could you Keith, into jumped just looks like we queue. if have Victor, or Keith the that -- it somebody

Yes.

just Brett ahead. can private in [ph], now. Davidson go to Please go jumped Someone We investor.

to in to it I'm the didn't queue, get on. the so first Apparently, I late work time jump tried Yes. little a

doing, you are Brett? How

got pretty quick doing just a questions. good. I've of couple I’m

or three quarterly in the is going out release forward, I'm going Some that issuing calls, ARIA these releases. here to had these about are indicates Vic, on of to release? one you about releases, because quarterly? And wondering, And there's And customers. you're the that going discussing time releasing press this come we new prevented press from ago these is just talked find press through through

Yes. they're and are know doing like They wants customers, to security that. what no policies stuff internally with one the

vertical, business, mention that. Everybody's lift might So forward, unfortunately. the of -- be to the but I able higher coming area on customers I'll the won't mention mention I

could that we a a release a generic size-wise in inked customer or… new Okay. just guys of these press saying you Are nature do

size the are Yes. could. on basis. we of the monthly -- two two there's No, -- of a that Yes, out we three

And working want we're -- put just we press they're want they to release go just So them a on. by just -- time still before to they that approved, with they something but them get some we to on before do we that. do

two, will or say, it least in be coming So months. on at couple next of month I up the would a

Yes, for it be helpful… us might score, keeping

to there. comfortable definitely, it's upcoming little them got We're press little had we we the a marketing time we'll definitely by. generic sure We just time. so signed department write to up. And that for a said, like releases with. some We do them No, go we'll I in just And installed, months. something our get then got just -- they're

with other three-year or follow-up how like a those Would licensing doing same good. structured? or the ARIA contracts with that lease question would is agreement, would regarding service customers? this be the that you're Great. be sounds thing whatever Joe's providers that And your like And That a using product. managed other be

be they it's Yes, customer licensing the will be than support. will a if product buying they and cloud-based

tenant them built they have we then to multi-tenant kind key. per multiple we the underneath. sell of could and And it our solution, So could tenants product we one basically for price so

or have is has they way. customer that So or X,XXX if IPs as XX priced XXX -- the

each screen as on every manages for one. customers tenant SOC one it they go. here, So and everybody the that manage same have could do one we our have we and internal We multi-tenant on the and

as buy that they too. to same that. on just So do they'll We'll it's it do were if way them. to do could it them be the offer we if And basis product, they a the for customer to able product if their we would then out they'll selling monthly direct do or straight want

Right.

them they IPs are and month this that Do to customers got month. five got next many report you they've how rely XX back for… used on So

license to say their -- who a as up license would basis unlimited monthly don't the have because grew. would basis IPs. and they if they a Yes, they We were have or And on yes, okay how an know then go. we sell quarterly chew also then right? them many end-user key, is we We

because the not started IPs with just customer So month at mean they're the or X,XXX. following doesn't off quarter, X,XXX a

that to to to can't to we're a add there's won't able process don't monitoring. those contract it access it. they -- because it's on constantly true-up the be right IPs So hide they them And keys it inside if we allow we're

is, timing Got whatsoever end contract it. year? having anticipate into Are and I the you kind scale the any things last from out the couple real new these quarter look of more next door. thing have And guys you of of arriving to it's at that insight what tough revenues like size, or doing adding guys kind next these your no our determine to revenues, going then are maybe modeling internally quarters a the

XXXX. budgeting We're Yes. modeling now doing for

to give we're So we're $XX,XXX But from idea And at all next to an then how a month month to to a potential or some that. the you a of at. size it's pipeline look the $X,XXX of doing new some list. estimate potentials adding going to. growth stuff in stage. customers customer models the customers then on dealing like, of we're year that And with the putting just are the and fast of some right? we're talking build on for -- at we then it current this timing a looking Just and we're the we're what course, budget looking We're the we're yes, could together to

range like. look there's So would on possibilities that of a what

it $XX,XXX couple a needle You start fast. the pretty a of moves clients month getting

So…

Yes. it. Got

of good installing quite the want growing We -- they're we're POCs a whatever but piece -- the few to have the to the have quarter-over-quarter it call or but they're actually a where you the them pipeline tires. grown that's right? it is site -- So POVs to and kicking customer of lot in that has we

they're course, dealing other the that Of -- that market have players in we're space. compared to job right to show looking the of competitors at too we're the hopefully are but value with we some doing other

Yes.

to of So some not Is having scenarios carry this hiring enough about leading bodies these is decisions some it to of concerns this modeling, like out work? now? impacting

a right? make stay you is door. out we're can are is only people the ones. good the to right there on is thing -- getting company. them you But how bad that better plenty only that to the opportunities many of good thing really The to pay lot thing to the And engineering bring with the have good a out is right? internal happy what now. out are much It's and keep sure the And got but No. the on right then one bad they figure board engineers to and looking knocking so about -- is are. to And them, with the there, lot you ringer salary your try there's engineers good The salesperson is them in you of all engineers always the you good, how for through your quick not just put find like there's have world they pretty not out there's

are not they but asking position we That week a world from if even job definitely my me I I'm a don't five get constantly in know of now -- weird the the live headhunters. who it's -- engineer. even like you a I and want knowing headhunters And call you're right looking. calling calls So those for security a it's four, right with -- place engineering there a

them getting I'm who them you if everyone know also. is getting here So works

Yes.

you team So this don't out? issue but same side an carry -- able -- to see of to as that being

work at helping all. places won best everything the one some comes thing at out that constantly their And two else the you of to are for a No, I and three one think one in think company benefit it's with to networks. And when reseller feedback awards work of one not the people too then When out recently all. between last you're working integrator, check we like a positive. not package, the No, along atmosphere not different consistently goes years engineers I over or us that with the you're the for network pretty infrastructure.

like So that you challenge is basis. monthly wants a a engineer perfect place like an and challenge change if this you that or for on weekly

You won't same with bored infrastructure. the be

Interesting.

time answer yes, huge So, that's you me down employees question pay that to taking I your But and to that us. appreciate to guys I forward for you the should care next of around. off road taking the talking to the and time look

You day. got it. Have a great

care. Take

Yes.

You too. Bye-bye.

no to questions. It Instructions] like I'll it we [Operator turn have Victor, looks back you.

Okay. Thank you, operator.

and support. want As always their interest I to thank our continued shareholders for

the product operating the sharing to forward full Until resources stay XXXX safe. our and focus portfolio the business. look and to have throughout results I December. in current climate have grow year and We well and service we quarter fiscal and and maintained fourth Gary be progress in then the our

you. Thank

participation. today's your for This program. will Thanks conclude

disconnect. now may You