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CSPI Reports Wider Y/Y Net Loss, 18% Revenue Growth in Q3
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Shares of CSP Inc. (CSPI - Free Report) have risen 1.7% since releasing third-quarter fiscal 2025 results on Aug. 14. Over the same period, the S&P 500 index slipped 0.2%. However, the stock has lost 2% in the past month, contrasting with the broader index’s 2.5% growth, reflecting investor caution despite near-term operational progress.
Revenue & Earnings Performances
CSPI generated revenues of $15.4 million for the quarter ended June 30, 2025, up 18% from $13.1 million in the year-ago period. This growth was fueled primarily by product sales, which climbed 29% to $10.2 million. Service revenues, at $5.3 million, showed only a marginal increase from last year. Despite higher sales, gross profit slipped to $4.5 million from $4.6 million as margins contracted to 29% from 34% due to a greater mix of product revenues and higher component costs. The company posted a net loss of $0.3 million, or 3 cents per share, compared with a net loss of $0.2 million, or 2 cents per share, a year earlier.
The Technology Solutions (TS) segment led growth, delivering a 20% year-over-year revenue increase, driven by strong demand for cloud services and robust activity in the maritime sector. Notably, the TS division secured a significant Microsoft Azure project for a Florida-based healthcare provider, underscoring CSPI’s strength in managed cloud offerings.
On the High-Performance Products (HPP) side, momentum was concentrated around the AZT PROTECT cybersecurity solution. New customer deployments included steel, concrete and lumber industries, while international traction expanded with follow-up contracts in South Africa to safeguard cell tower monitoring systems. Management emphasized that reseller partnerships with leading Rockwell Automation distributors are moving from early adoption to revenue acceleration, setting the stage for broader penetration in fiscal 2026.
Management Commentary
CEO Victor Dellovo highlighted that CSPI is executing a land and expand strategy, wherein initial site deployments of AZT PROTECT often serve as proof points for broader rollouts across enterprise networks. This approach has already yielded promising results, with customers citing measurable operational benefits such as preventing system outages in critical industrial environments. Management noted the potential for five and six-figure recurring contracts as the installed base grows.
CFO Gary Levine explained that gross margin pressure was tied to the product mix and higher costs. At the same time, operating expenses increased due to higher sales and marketing expenditures to support the expansion of AZT PROTECT. Importantly, the company ended the quarter with $26.3 million in cash and continued share repurchases, reflecting financial flexibility despite near-term earnings softness.
Factors Influencing Headline Numbers
While revenue growth was robust, several factors limited the bottom-line performance. First, the stronger weighting toward lower-margin product revenues, as opposed to services, reduced overall profitability. Second, CSPI incurred additional engineering and consulting expenses to enhance AZT PROTECT, including high-level testing and customer-driven feature development. These investments, though pressuring margins, were framed as critical to securing CSPI’s competitive positioning in the cybersecurity market.
Another factor was modest service revenue growth. While the TS business benefited from cloud adoption, managed services expansion was more gradual, tempering the recurring revenue contribution that typically supports margin stability.
View
Management did not issue formal numerical guidance but indicated optimism for both the fourth quarter and 2025. Dellovo noted that momentum in both TS and HPP segments persisted into the early fourth quarter, raising confidence that the company can expand both revenues and earnings in fiscal 2025. Executives also pointed to accelerating interest from resellers and international partners, which they believe can drive larger six and seven-figure contract opportunities in the near term.
Other Developments
In the quarter, CSPI was added to the Russell 3000 Index, broadening its exposure to institutional investors. The company also authorized a quarterly dividend of $0.03 per share, payable Sept. 15, 2025, reflecting a continued commitment to shareholder returns. Additionally, CSPI repurchased more than 19,000 shares for $0.3 million, with 0.3 million shares still available under the 2021 repurchase program.
In summary, CSPI delivered strong revenue growth in its fiscal third quarter, led by Technology Solutions and growing traction for AZT PROTECT. Yet, margin pressures and a modest net loss highlighted the costs of scaling its cybersecurity offering and shifting revenue mix. Management remains upbeat about sustained momentum into the fiscal year’s final quarter, supported by robust pipelines, reseller enthusiasm and international expansion.
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CSPI Reports Wider Y/Y Net Loss, 18% Revenue Growth in Q3
Shares of CSP Inc. (CSPI - Free Report) have risen 1.7% since releasing third-quarter fiscal 2025 results on Aug. 14. Over the same period, the S&P 500 index slipped 0.2%. However, the stock has lost 2% in the past month, contrasting with the broader index’s 2.5% growth, reflecting investor caution despite near-term operational progress.
Revenue & Earnings Performances
CSPI generated revenues of $15.4 million for the quarter ended June 30, 2025, up 18% from $13.1 million in the year-ago period. This growth was fueled primarily by product sales, which climbed 29% to $10.2 million. Service revenues, at $5.3 million, showed only a marginal increase from last year. Despite higher sales, gross profit slipped to $4.5 million from $4.6 million as margins contracted to 29% from 34% due to a greater mix of product revenues and higher component costs. The company posted a net loss of $0.3 million, or 3 cents per share, compared with a net loss of $0.2 million, or 2 cents per share, a year earlier.
CSP Inc. Price, Consensus and EPS Surprise
CSP Inc. price-consensus-eps-surprise-chart | CSP Inc. Quote
Other Key Business Metrics
The Technology Solutions (TS) segment led growth, delivering a 20% year-over-year revenue increase, driven by strong demand for cloud services and robust activity in the maritime sector. Notably, the TS division secured a significant Microsoft Azure project for a Florida-based healthcare provider, underscoring CSPI’s strength in managed cloud offerings.
On the High-Performance Products (HPP) side, momentum was concentrated around the AZT PROTECT cybersecurity solution. New customer deployments included steel, concrete and lumber industries, while international traction expanded with follow-up contracts in South Africa to safeguard cell tower monitoring systems. Management emphasized that reseller partnerships with leading Rockwell Automation distributors are moving from early adoption to revenue acceleration, setting the stage for broader penetration in fiscal 2026.
Management Commentary
CEO Victor Dellovo highlighted that CSPI is executing a land and expand strategy, wherein initial site deployments of AZT PROTECT often serve as proof points for broader rollouts across enterprise networks. This approach has already yielded promising results, with customers citing measurable operational benefits such as preventing system outages in critical industrial environments. Management noted the potential for five and six-figure recurring contracts as the installed base grows.
CFO Gary Levine explained that gross margin pressure was tied to the product mix and higher costs. At the same time, operating expenses increased due to higher sales and marketing expenditures to support the expansion of AZT PROTECT. Importantly, the company ended the quarter with $26.3 million in cash and continued share repurchases, reflecting financial flexibility despite near-term earnings softness.
Factors Influencing Headline Numbers
While revenue growth was robust, several factors limited the bottom-line performance. First, the stronger weighting toward lower-margin product revenues, as opposed to services, reduced overall profitability. Second, CSPI incurred additional engineering and consulting expenses to enhance AZT PROTECT, including high-level testing and customer-driven feature development. These investments, though pressuring margins, were framed as critical to securing CSPI’s competitive positioning in the cybersecurity market.
Another factor was modest service revenue growth. While the TS business benefited from cloud adoption, managed services expansion was more gradual, tempering the recurring revenue contribution that typically supports margin stability.
View
Management did not issue formal numerical guidance but indicated optimism for both the fourth quarter and 2025. Dellovo noted that momentum in both TS and HPP segments persisted into the early fourth quarter, raising confidence that the company can expand both revenues and earnings in fiscal 2025. Executives also pointed to accelerating interest from resellers and international partners, which they believe can drive larger six and seven-figure contract opportunities in the near term.
Other Developments
In the quarter, CSPI was added to the Russell 3000 Index, broadening its exposure to institutional investors. The company also authorized a quarterly dividend of $0.03 per share, payable Sept. 15, 2025, reflecting a continued commitment to shareholder returns. Additionally, CSPI repurchased more than 19,000 shares for $0.3 million, with 0.3 million shares still available under the 2021 repurchase program.
In summary, CSPI delivered strong revenue growth in its fiscal third quarter, led by Technology Solutions and growing traction for AZT PROTECT. Yet, margin pressures and a modest net loss highlighted the costs of scaling its cybersecurity offering and shifting revenue mix. Management remains upbeat about sustained momentum into the fiscal year’s final quarter, supported by robust pipelines, reseller enthusiasm and international expansion.