On August 13, 2024, CSP Inc (CSPI, Financial) released its 8-K filing for the fiscal third quarter ended June 30, 2024. CSP Inc, along with its subsidiaries, develops and markets IT integration solutions, security products, managed IT services, cloud services, purpose-built network adapters, and high-performance cluster computer systems. The firm operates in two segments: Technology Solutions and High-Performance Products, generating a majority of its revenue from the Technology Solutions segment, primarily in the Americas.
Performance and Challenges
CSP Inc reported revenue of $13.1 million for the fiscal third quarter, a decrease from $17.7 million in the same period last year. This decline is attributed to the previous year's conversion of a sizeable backlog to revenue due to eased supply chain issues. Despite this, service revenue saw a 10% increase to $5.3 million, up from $4.8 million in the prior year. Gross profit for the quarter was $4.6 million, or 35.0% of sales, compared to $5.9 million, or 33.5% of sales, in the previous year.
Financial Achievements
One of the notable achievements for CSP Inc is the near-record cash position of $28.9 million as of June 30, 2024. This strong cash position ensures the company has the resources to support the growth strategy for its AZT PROTECT product offering. The company generated $2.4 million in operating cash flow during the quarter and repurchased 4,800 shares for a total cost of $70,000.
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Revenue | $13.1 million | $17.7 million |
| Service Revenue | $5.3 million | $4.8 million |
| Gross Profit | $4.6 million | $5.9 million |
| Net Income (Loss) | $(0.2) million | $2.5 million |
Balance Sheet and Cash Flow
As of June 30, 2024, CSP Inc reported total assets of $66.8 million, up from $65.9 million as of September 30, 2023. The company's cash and cash equivalents increased to $28.9 million from $25.2 million. Accounts receivable decreased to $9.4 million from $13.0 million, while financing receivables increased to $8.7 million from $7.2 million.
Commentary and Analysis
Our business returned to a normalized run rate during the fiscal third quarter as we continued to execute our plan to build the infrastructure required to drive future AZT PROTECT sales," commented Victor Dellovo, Chief Executive Officer.
The company's focus on expanding its Technology Solutions business and the development of its AZT PROTECT offering is evident. The addition of new MSP customers and the expansion of existing relationships are positive indicators for future growth. The company's strategy to self-fund the development and market entry of AZT PROTECT through the strength of its Technology Solutions business is a prudent approach.
Overall, CSP Inc's fiscal third quarter results reflect a period of transition and strategic investment. While revenue has declined compared to the previous year, the growth in service revenue and the strong cash position are positive signs. The company's efforts to build infrastructure and expand its product offerings position it well for future growth.
Explore the complete 8-K earnings release (here) from CSP Inc for further details.
