CSP Inc (CSPI, Financial) released its 8-K filing on December 20, 2024, detailing the financial performance for the fiscal fourth quarter and full year ended September 30, 2024. CSP Inc, a provider of IT integration solutions, security products, and managed IT services, operates through two segments: Technology Solutions and High-Performance Products. The company generates most of its revenue from the Technology Solutions segment, primarily in the Americas.
Performance Overview and Challenges
For the fiscal fourth quarter, CSP Inc reported a revenue of $13.0 million, a decrease from $15.3 million in the same period last year. The company faced a net loss of $(1.7) million, or $(0.18) per diluted share, compared to a net income of $1.4 million, or $0.15 per diluted share, in the previous year. This decline highlights the challenges CSP Inc faces in maintaining profitability amid strategic transitions.
The full-year revenue also saw a decline, reaching $55.2 million compared to $64.6 million in the prior year. The net loss for the fiscal year was $(0.3) million, or $(0.04) per diluted share, contrasting with a net income of $5.2 million, or $0.55 per diluted share, in the previous year. The decrease in revenue and profitability underscores the impact of product mix and market conditions on the company's financial health.
Financial Achievements and Strategic Initiatives
Despite the challenges, CSP Inc achieved a record cash position of $30.6 million as of September 30, 2024. This strong cash reserve positions the company to implement growth strategies, including the expansion of its AZT PROTECT product line. The recurring revenue increased to approximately 17% of total revenue, up from under 5% two years ago, indicating a successful shift towards higher-margin products and services.
Our results for the fiscal fourth quarter and full year were in-line with our internal projections as we completed a sales force transition and built market interest in our AZT PROTECT™ product line," commented Victor Dellovo, Chief Executive Officer.
Key Financial Metrics and Analysis
The gross profit for the fourth quarter was $3.7 million, or 28.4% of sales, down from $5.2 million, or 33.8% of sales, in the previous year. For the full year, the gross profit was $18.9 million, or 34.1% of sales, compared to $21.9 million, or 33.9% of sales, in the prior year. The decline in gross profit is attributed to changes in product mix.
| Metric | 2024 | 2023 |
|---|---|---|
| Revenue (Q4) | $13.0 million | $15.3 million |
| Net Income (Q4) | $(1.7) million | $1.4 million |
| Revenue (Full Year) | $55.2 million | $64.6 million |
| Net Income (Full Year) | $(0.3) million | $5.2 million |
Conclusion
CSP Inc's financial results reflect the challenges of transitioning its business model and product offerings. The decline in revenue and profitability highlights the need for strategic adjustments. However, the increase in recurring revenue and a strong cash position provide a foundation for future growth. The company's focus on high-margin products and strategic partnerships, such as with Rockwell Automation, is expected to drive growth in fiscal 2025.
Explore the complete 8-K earnings release (here) from CSP Inc for further details.
