CSP (CSPI) 8 Feb 232023 Q1 Earnings call transcript

Good day, and welcome to the CSPi's First Quarter and Fiscal Year 2023 Conference Call. At this time, all participants have been placed on listen-only mode and the floor will be opened for questions and comments after the presentation.

It is now my pleasure to turn the floor over to your host, Michael Polyviou. The floor is yours.

Terrific, thank you, Kelly. you quarter us XX, results, thank fiscal review XXXX. and first XXXX which everyone, for to joining CSPi's Hello, ended December Chief With Victor Levine, call the Chief Executive CSPi's CSPi's me Gary Officer; Officer. today Financial and on Dellovo, is conclude Victor we'll then questions. opening open After their remarks, call the Gary for and

will, is today's The Statements facts statements forward-looking to may on the believe, identified federal business laws. call expect, term securities in made may, plan, forward-looking identify as by and CSPi's that project, company's words be as as regarding statements. continue intended management similar intend, are historical anticipate, the not are expressions estimate well

should results. future be not a as performance statements guarantee or of Forward-looking read

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

new update information as the or All CSPi the belief those by or qualified obligation time this events. publicly the no at a information, any are revise otherwise statements events and available to based the statements, entirety of thereof. as statement, faith after forward-looking and in on time management's statements whether date future made undertakes Forward-looking good statements with are their cautionary result of forward-looking future to are respect

the call Dellovo, go Victor, Officer. please turn Chief ahead. With Victor to Executive over I'll that,

morning, Thanks, everyone. Michael, good and

last overall XX% XX%, reported start We we total This December, to a sales sales segments in on cylinders. year prior product fiscal back quarter each that fiscal all the with over noted morning, service first sales When the you grew and of of XXXX. hitting talked we strong business we were XX% very the year.

We the over gross margins year quarter overall to X.X percentage increased and fashion our during first continue similar with to by last execute points XX.X%.

and are revenue a to earnings $X.XX share generating led gross share, start last All margin year's quarter. quite The year, last our of fiscal to the per proud performance lost all, fiscal $X.XX we first during in while we in XXXX.

and business the the offer course During higher to stayed our value migrated, as cybersecurity, offerings. several years, past we we've wireless managed service

It was related - well show both but and to as award-winning The potential of easy its our with its pandemic products our challenges, especially it customers is easy, building. model is beginning COVID-XX business shareholders. its and demand onset to our our for as to the value wasn't services

We our existing at increasing with time business gaining the new are same customers. customers, while

It our was grow but revenue Our during fully during doubled compared first to quarter. year-old engagements, a more customer quarter. Technology At time, to than Product primarily they business continues same the business to Solutions quarter. first the High-Performance due sizable the recognized

progresses. are While contributor as from another, growing is fiscal be potential that movement to our timing will to cautiously orders business business and quarter subject HPP the one robust, of pipeline our we the is year optimistic

morning's the opportunity front this I in we - company's than history. in any business have stronger us is noted and our time our release, pipeline In news of today

engineers of top-notch are and solutions unique some leading our with factors. the combined strategy Our

expanding base of continuing these We R&D to fund are that provide our so solutions unique product to continues to customers. our

months. some opening with positive to CSPi hope talked doors the prior we before, reception to companies that these capabilities have market coming and never The is have to us for news early over

a have to momentum expand, realize opportunities we our full we to the hurdles potential. our strong overcome continue marketplace do in and have to While

supply are the highest lot the problem is constraints better last chain of height The we hurdles gone of experiencing summer. since over of such the has One a continued our a suppliers. few

realized. frame the time historic on However, orders delivery is six-week still being

However, the loyal enforcing severe to issues the certain down and areas. are that believe our China to supply us. to good We is continue until chain mid-December, in news quarantines COVID-XX they customers very because locked continue exist stay still is

ramp can't our While their some of China, sourcing suppliers of out have up moved they overnight.

hopeful supply constraints relax will its that will which over China chain regulations remain we reduce So time.

business managed revenue Technology Solution, growth in quarter practice. a Our during the was driven service or by fiscal TS,

$XX.X and customers. revenue increased existing a generated increase million, of revenue XX% over we new are customers winning business from TS a We earning year ago while

beginning the because of to impacted shifted cycles the this During were quickly not we sales sales it being restrictions. and pandemic, was shorter by segment

revenue become have it's as focus And driven grew and was prior we from managed continued growth increase customers' of installation The of years. - this to training by a the practice and increasing the segment past on XX.X% customers service over capabilities. use year couple engine implementation,

HPP, and that its been have sharing we High-Performance the quite strongest with you reinforces business had year. in one the settlement Products, of or over quarters Our some past time

was finalize year contributor time, level for The and had ship which Myricom. E-XD We critical as components million. we to of program a as order. related million, reported revenue increase primary royalty and some for contract, $X.X from also a of compared waiting revenue to a were some well significant revenue from government expected The ago been included just to $X.X contributions the quarter

fiscal we year. summarize, start to To had a the great

the two products higher-margin of progress and XX% quarter, growth. solid the meet strength new This Our our reported of each strategy demonstrates to of backlog revenue consecutive offering. also nearly of yielding that Despite of order orders. converting older plus have we number, some we on an quarters customer is and - equal services revenue, demand focusing booked

lost a it single order not in had continued this engagement Yet also our backlog. we loyalty period from during highlights the customer since

today, player and in active realize resources potential. an transitioned period. and we our the this successfully margin are the We to high-growth we that believe And have strategy we our business unprecedented business. and And during have wherewithal

now With of overview financial ask first Gary performance. that, will provide a quarter to brief our fiscal I

Thanks, Vic.

mentioned Victor sales first improvement had million, solid over a with his As of first remarks, profit quarter. year quarter year XX.X% in first or with $XX.X million in or the of ago reported compared fiscal ago quarter. sales million a $X.X of fiscal revenue sizable fiscal $X.X we opening We the gross of XX.X%

each quarter fiscal XX%. level a gross product service increase margin with while we the to of sources, revenue And ago first gross significant the surpassed experienced year again in compared margin

the fiscal quarter $XXX,XXX ago year compared expenses for Our $XXX,XXX in to were period. approximately development first engineering and the

we personnel have to is As outside include disclosed primarily increase higher previously, consultants. which the due costs,

were reported $X up slightly ago first compared common the fiscal net loss $X.X XXXX's the quarter QX of $XXX,XXX SG&A Our diluted gross quarter. fiscal first expenses a margin compared first of to income or increased due profit. higher or year per $X.XX with on million, to million based fiscal We share variable in share quarter compensation per in $X.XX for

fiscal primarily company $X.X which first fourth in in to December XXXX of recognized $XX.X September quarter as in XXXX during fiscal compared fiscal due of had the first but customer cost 'XX level, a year was to lower XXXX, approximately year quarter of the million referenced million cash the revenue financing cash The the previously equivalents quarter. sale as is XX, XX, XXXX, the large paid of and

service the share highlight to additional I that purchase stock March authorized on ensured the also shares couple XX, have to that approved shareholders of we of execute quarterly we the years common to have multiyear plan. strategy company. part on cybersecurity, and of business wireless issue transforming close XXXX. We on payable CSPi vigilance February to want have record as the per Directors The XXXX, employed dividend a our have Board the of growth $X.XX an XXX,XXX to stock of a XXXX over of of past employee XX, resources of managed

to will take to questions. that, the your With it I over operator turn

Nerges Instructions] live. from pose line first question is your [Operator your is coming Sergen Investments. Your Certainly question, Please Joseph at

today. How guys. are you morning Good

Hi, Joe very good.

of you you that name that couple in that? am This - correct want want Is questions, having release quick customer HPP customer the to name engagement you in press mentioned don't the don't a sizable - customer sizable engagement. I first to assuming I'm itself. A Okay. in about quarter. the

right. customer per se, the Right

years the are chain up ago? to experienced, two, said still you better were last point issues say, you supply What they than three still but little this in time. a And snuff not year, at

but correct. business. of bit not to It's better, that that better. do quite gotten happen much we a in certain little That's a It's vendors

Okay.

on are than new with high-tech let's new easier people. you you've any months a one mentioned about extent? the you the amount of is able latest other people be announcements or on to words, six Another lessening issues personnel little that a ago? say, call, assume find In I hiring to would layouts, were, of obtaining previous

haven't The really opportunities. and is at both you we sales for. environment anyone which has else here from for can good. other slowed that hired engineering, stable, Well, tell But it's looking I leaving we're people really internal looking CSPi been down on support,

nervous they to positions are may at layoffs. case It are new in any the be other organization think respecting I be have. currently the people job there person

your something wondering, newsletter quick put industry, Well with helping, it in the the I year-end way or? with so the that high-tech you I couple - letter, is talked road I you're announcements of like just solid said, your finding or Unified-Communications-as-a-Service month that letter, And things. From about that's or numerous last the potential your again, down was here in a that let's growing. a assume

pipeline on deals pipeline now strong some quarter, we we're deals real And the closed the opportunities basis. hopeful that is opportunities multiple We that that multiyear are - are Yes, will there's, signing to we're has been. a three-year that in as the monthly as been definitely because trying these all build large close help it's deals strong. and

cruise couple Okay, industry? bit sounds the in How a of a Has say, months? let's that little last, about that opened the good. up

which has on a or with or more the happening on cruise of but software piece out - active are start are wireless, confirmed the some some conversational the and lately. and have going doing the Nothing ships to exactly to Conversations work are security the up, now when we good, the right talks engagements doing frequent but lines, the been basis. ships opened on roll software planning either we're

for well, what my it ships cruise actually in you prior? were years? putting past were the in information, you Right, doing Is Wi-Fi just what

wireless, maps. the it - are not were doing was all we the Yes, doing only the also and and configuration of we pre-configuration but site doing was the Wi-Fi the it it was

also were on APs need solution, where we of placed to HP go maps called ship made doing the site and placed. which NAC the Aruba. that's we'd do we the or all ClearPass, would is be the And So by be first, and would then

So ships some of capability. the you some awaiting have...? ships that are have still and correct, capability this otherwise, Is this

were have to they it's No, a upgrading them, all better just quality but of they product.

those and these more, steel and a of older there's a have APs were more vessel being where Some efficient. of older on ships lot APs lot products and a

One quarter quarter had versus - that - with didn't point the negative quarters. you the currency a rate in rate exchange is rate of there Okay. - exchange? to here, previously, did Was mention this we've benefits other this currency and exchange some currency how the exchange previous the affect

did. we quarter. The negative was Yes, it against the... dollar yes, weakened this We had

negative of almost was $XXX,XXX. it Yes,

Okay.

we the than if more again, down on was had that have would it So would $XXX,XXX - equal, the..? be

Correct.

yes, Correct yes. was - $XXX,XXX, and It forgot and was $XXX,XXX exactly number. I the XXX it

three Google other great make it. artificial intelligence around And point, basically current just one make have not we I deal of want buying into a intelligence between a it, ago? There's buying in two area to to platform want Microsoft into incorporated hype artificial to point And our the that I just statement. years

yes. absolutely, did we Yes,

thanks So lag. in not just say, behind I'm trying the much to let's that say, we're somewhere but particular aspect, so game I again guys.

Thank you, Joe.

you, No, yes. Joe talk soon. you to Thank

Yes.

pose from is Brett live. Please line Investletter. question with your your is coming next question, Davidson Your

Good morning.

Good Brett. morning,

got I touched issue. say cruise just Product, that already indicated get on of Joe one not I the an on person, update was going Well, to supply the just High-Performance is which a much that an still helps. I morning let's quick you know I'm business, chain that. question. but The

there? on an needed, look what have me give gotten volume your what over if everything If hands you the - you sales could estimate additional would of you like could

HPP the On or total company? the

you that have HPP sales, I you with if to looked what needed the the what parts mean, you could your hands on orders ship, what Myricom have stuff, No, it the like the guys would gotten product for? all have

The backlog is about $X.X million.

Now contracts that ARIA related is some deferred to they've time. the of because over

backlog. them keep you So in

want well the as it got So customer portion but over we've a got time. product, They've of a spread doesn't some - that's as it.

entire lump So it the that are... get isn't they one at we amount would sum, because

I deliver mean the did chain, product that impact really? not - your or issue ability supply supply the to

Yes.

I around about if to $X have of - $X that's to would, $X would million, just for go margin profit high I the would the say very been say and Yes, shy systems. I million components say a we at had I would million bought in able considerably. it about maybe half would - build

the to since to quarter, ease, your getting the of - imagine parts? that on end imagine is would continuing I the I pressure got the hands And that

No, Not.

at be with not honest some to all, Not yes. it's in you, really. cases, worse, getting No,

No.

million sounds the way that than hope I better because, $X today quarter. next yes, Well, God. my swings Oh million $X other

all thanks guys. got, That's I

Yes.

as at the because we of of soon Thanks can larger shipped we it some organizations. we're get do, mercy these As out, Brett.

is question is your from your Mike live. Please Price. next question, coming pose Your line

on congratulations you good ARIA morning, what related? ARIA the how backlog Good for a the And the revenues quarter? quarter. of is tell much were us Can

was about, I million. and $X.X $XXX,XXX backlog then the The ARIA about probably is revenue think,

not upside the a seems not area? growth it big ARIA. that huge this Is there's I mean Is like case? with

you forward It's technology mentioned and it - once with good we've is. - But don't larger have had the product them. not they is. moving if there until recognition chance calls, Yes, company, a Gartner, we're under with we just they're It's it. get But name our really it's have in problems. what I on as sometimes focusing winning you get on we we're not of It previous the And revenue. go some even outperforms if it.

quite a that's that dollar They a bit actually. seen go organization. company of still kind We've multibillion with a

a have we accounts over dozen So now.

do that we're little not - we're a the of product. organizations still our easier, of for some So not Magic but a Quadrant into and getting their SIM when it's They yet. get on and Quadrant, Magic on you looking are lot

And revenue a there's a go we're there's through, talking to but requirement. to lot and Gartner,

have get chicken you how a if on there and you unless the revenue it's get you on how revenue do So effect you're the and it. egg not do

area So but just focus our - it's it's taking time.

it is? and Is as good you as of the aware technology industry the think

people We're to we information as will providing that as can much many as listen.

somebody can't larger get more Okay. you than door is The question. the if with question is, ARIA can in the do what

Yes, absolutely.

Okay. the other A I couple questions, correct? the of only quick that Is think been of order I repurchase, XXX,XXX share didn't about on XX,XXX has shares see original repurchased. the something XX,XXX anything or

we - quarter. didn't Yes, there in stock any the in purchase

of since discuss? the you can the anything, In end quarter quarter the that

buy. Well, in period where No. we can't we're couldn't we that -

don't the going there's be I know upside you've the again, as with what that if Well not able huge the the at like now, like as seems seems you to Okay. doing. powder it you going what it and like case? outlined everything prospects far to same buy want but you're time, not it it. forward, looks Is dry, you're buy for to it keep

Yes absolutely.

has Okay. do to Last with dividend. the question

You've never a rates cash good up. been position, position. are better in Interest

pre-COVID, So dividend are some was raising is earning income have XX% cash. it you the there what the hopefully prospects of for Any - dividend? the pre-PPP. And on interest

right decided at we stage we're our been We right at we've the particular near - Things to some cash right? meeting, the at with this financing change hand customers sticky, of deals last our at point. looking future. keeping it that with about will talked in We at the keep may this doing

it you. the Thank look Appreciate next call. right. forward all to Okay,

you. Thank

further no floor turn would queue. to Instructions] There appear the I over Dellovo, in questions time, like this At CEO, be Victor the remarks. back to for [Operator closing to any

Thank you.

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

We of to the the significant current of are remainder have quarter continuing momentum year. reported now in growth we quarters for consecutive experience and us excites the

product portfolio forward conversion, Until fiscal then, May. to progress in revenue favorable margins. generating gross and Gary and operating solid have results I a We pipeline quarter and stay in second be strong XXXX look safe. sharing our are service well in

Thank you.

you. call. today's does Thank conclude This conference

your phone participation. time, your have you a lines may at Thank You this for and disconnect day. wonderful