CSP (CSPI) Q3 2025 earnings summary

Executive summary

• Fiscal Q3 2025 revenue rose 18% year-over-year to $15.4 million, driven by strong Technology Solutions performance and expanding AZT Protect deployments, with notable wins in South Africa and new industrial verticals.

• Product revenue increased 29% year-over-year to $10.2 million, while service revenue was stable at $5.3 million.

• Gross margin declined to 29% from 35% due to higher component costs and a greater product revenue mix, resulting in a net loss of $0.3 million for the quarter.

• Added to the Russell 3000 Index as of June 30, 2025, enhancing institutional visibility.

• Managed cloud business and AZT Protect deployments expanded in key sectors, leveraging a land-and-expand approach and building long-term customer relationships.

Financial highlights

• Q3 revenue was $15.4 million (up $2.3 million YoY); gross profit $4.5 million; net loss $0.3 million ($0.03 per share); nine-month revenue $44.3 million; nine-month net income $0.1 million ($0.01 per share).

• Gross margin for Q3 was 29%, down from 35% in the prior year, and nine-month gross margin was 30%, down from 36%.

• Cash and cash equivalents at quarter-end were $26.3 million.

• SG&A expenses rose by $0.2 million, mainly from increased sales and marketing for AZT Protect and higher compensation and UK pension costs.

• Operating cash flow for nine months was $0.4 million, down from $5.7 million prior year.

Outlook and guidance

• Management expects continued momentum and potential for further top and bottom line growth for the full fiscal year if current trends persist.

• Resellers anticipate moving from early adoption to revenue acceleration for AZT Protect in the next 3-6 months.

• Progress with additional resellers and new market segments, including water facilities, is expected to yield results in fiscal 2026.

• Management expects available cash, operations, and credit to cover working capital and capex needs for at least 12 months.

• Ongoing evaluation of the impact of new U.S. tax law (OBBBA) and global trade tensions; financial effect not yet determined.