CSP (CSPI) Q1 2026 earnings summary

Executive summary

• Fiscal Q1 2026 revenue was $12 million, down from $15.7 million year-over-year due to the absence of large one-time product deals in the prior year, resulting in a 23% sales decline.

• Service revenue grew 14.6% year-over-year, driven by technology solutions, managed services momentum, and strong customer retention.

• Gross margin improved to 39.3%, up from 29.1% in the prior year, reflecting a higher mix of services and favorable product mix.

• Net income for Q1 2026 was $91,000 ($0.01 per diluted share), down from $472,000 ($0.05 per diluted share) in Q1 2025.

• Board declared a quarterly dividend of $0.03 per share, payable March 12, 2026.

Financial highlights

• Product revenue was $6.7 million, down from $11 million year-over-year due to the absence of large one-time deals.

• Service revenue reached $5.3 million, up from $4.7 million year-over-year.

• Gross profit increased slightly to $4.7 million from $4.6 million year-over-year.

• Operating loss narrowed to $112,000 from $354,000 year-over-year.

• Cash and cash equivalents stood at $24.9 million as of December 31, 2025.

Outlook and guidance

• Management expects fiscal 2026 to be a growth year, with continued service segment momentum, a strong sales pipeline, and operating leverage as revenue grows.

• New managed service customers signed in Q1 are expected to generate nearly $100,000 in additional monthly recurring revenue.

• Strategic investments in managed services and AZT PROTECT deployments are expected to drive further high-margin growth.

• Management expects available cash, cash from operations, and line of credit to be sufficient for at least 12 months.