CSP (CSPI) Q3 2026 earnings summary

Executive summary

• Q3 2026 revenue was $14.4 million, down 6% year-over-year, with gross margin improving to 30.1% from 28.8% and a net loss of $846,000 ($0.09/share).

• Technology Solutions business saw solid growth in cloud and managed services, but performance was impacted by extended hardware vendor delivery times and longer sales cycles for AZT PROTECT enterprise deals.

• AZT PROTECT achieved a 100% renewal rate, expanded deployments, and completed integration with Acronis and a major South African telecom.

• Several large six-figure AZT PROTECT opportunities are nearing the end of their 18-24 month sales cycles.

• Backlog in Technology Solutions increased 65% year-over-year due to delayed hardware deliveries, with vendor lead times now exceeding 200 days.

Financial highlights

• Product revenue was $9.9 million (vs. $10.2 million prior year); service revenue was $4.5 million (vs. $5.3 million prior year).

• Gross profit was $4.3 million, down from $4.5 million, but gross margin improved to 30.1% from 28.8% year-over-year.

• Net loss for Q3 was $846,000 ($0.09/share), compared to a net loss of $264,000 ($0.03/share) in Q3 2025.

• For the nine months ended June 30, 2026, revenue was $42.4 million (vs. $44.3 million prior year), with a net loss of $491,000 (vs. net income of $100,000 prior year).

• Cash and cash equivalents at quarter-end: $24.7 million.

Outlook and guidance

• Management expects continued growth in managed services and AZT PROTECT, with a focus on expanding both customer base and deal size.

• Hardware supply chain delays are expected to persist for at least another year, impacting revenue recognition.

• Anticipates acceleration in AZT PROTECT OEM and direct sales channels as integrations complete and sales teams are re-engaged.

• Available cash, operational cash flow, and credit facilities are expected to be sufficient for at least 12 months.

• No material changes to risk factors or critical accounting policies were reported.