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CSPI Q4 Loss Narrows Y/Y, Revenues Grow Amid Volatility
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Shares of CSP Inc. (CSPI - Free Report) have lost 15.1% since reporting results for the fourth quarter of fiscal 2025, underperforming the S&P 500 index’s 0.2% decline over the same period. Over the past month, however, the stock has moved in the opposite direction, gaining 16.2% compared with the S&P 500’s 2.7% advance, indicating a sharp rebound in more recent trading activity despite the post-earnings pullback.
For the quarter ended Sept. 30, 2025, CSP reported revenues of $14.5 million, up 11% from $13 million in the year-ago quarter, driven primarily by a surge in services revenues. Gross profit rose to $5.3 million from $3.7 million a year earlier, lifting the gross margin 800 basis points to 37% from 28%. The company posted a net loss of $191,000, or 2 cents per diluted share, a marked improvement from a net loss of $1.7 million, or 18 cents per diluted share, in the prior-year quarter.
For fiscal 2025, revenues increased 6% to $58.7 million, while the net loss narrowed to $91,000, or 1 cent per share, from $326,000, or 4 cents per share, in fiscal 2024.
A notable shift in revenue mix continued in the quarter. Service revenues jumped 63% year over year in the fiscal fourth quarter and accounted for 44% of the total revenues compared with about 30% in the year-ago period. For fiscal 2025, services represented 36% of the total revenues versus 33% a year earlier, underscoring the company’s increasing emphasis on higher-margin offerings. Product revenues declined year over year in the quarter, but growth in services more than offset that pressure.
The operating loss for the quarter narrowed to $0.5 million from $2 million a year earlier, reflecting the benefits of margin expansion and relatively stable operating expenses. On the balance sheet, CSP ended fiscal 2025 with $27.4 million in cash and cash equivalents, down from $30.6 million a year earlier, while financing receivables increased as the company continued to provide customer financing.
Management Commentary
Management characterized the quarter as a strong finish to the fiscal year, highlighting the role of the Technology Solutions segment in driving both quarterly and full-year growth. Executives emphasized high customer retention across multiple industries and pointed to managed services and cloud offerings as key contributors to the rise in service revenues.
Leadership also discussed expanding the sales organization to capture a larger share of the services market, citing opportunities to build on the double-digit growth achieved in fiscal 2025. In addition, management expressed optimism about increasing adoption of its AZT PROTECT cybersecurity solution, noting a growing pipeline and expanding relationships with strategic partners and distributors.
Factors Influencing Headline Numbers
The most significant factor behind the quarter’s results was rapid growth in service revenues, which carries a higher gross margin than product sales. This shift in mix drove the substantial margin expansion and helped narrow operating and net losses. Research and development expenses rose modestly year over year as the company invested in new features and integrations for AZT PROTECT, while selling, general and administrative costs remained essentially flat.
Management also pointed to continued investment in building a sales pipeline and customer adoption, which weighed on near-term profitability but is intended to support longer-term growth. Additionally, the timing and mix of product sales influenced quarterly comparisons, with lower product revenues partially offset by service strength.
Management View
Management offered qualitative commentary, stating that the company entered the new fiscal year 2026 optimistic about delivering additional growth and improving profitability. Executives indicated expectations for continued momentum in services and increased adoption of AZT PROTECT across industrial and operational technology environments, while acknowledging that the timing of customer rollouts and revenue recognition can be uneven. As a result, management refrained from projecting specific quarterly revenue patterns, emphasizing variability tied to customer deployment schedules.
Other Developments
In the fiscal fourth quarter, CSP’s board declared a quarterly cash dividend of 3 cents per share, payable Jan. 15, 2026, and the company repurchased approximately 19,500 shares for $234,000. The company also highlighted partnerships, including work with Rockwell Automation distributors and an agreement to integrate AZT PROTECT into Acronis’ Cyber Protect solution. These developments reflect efforts to broaden distribution and strengthen market presence rather than acquisitions or divestitures during the period.
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CSPI Q4 Loss Narrows Y/Y, Revenues Grow Amid Volatility
Shares of CSP Inc. (CSPI - Free Report) have lost 15.1% since reporting results for the fourth quarter of fiscal 2025, underperforming the S&P 500 index’s 0.2% decline over the same period. Over the past month, however, the stock has moved in the opposite direction, gaining 16.2% compared with the S&P 500’s 2.7% advance, indicating a sharp rebound in more recent trading activity despite the post-earnings pullback.
For the quarter ended Sept. 30, 2025, CSP reported revenues of $14.5 million, up 11% from $13 million in the year-ago quarter, driven primarily by a surge in services revenues. Gross profit rose to $5.3 million from $3.7 million a year earlier, lifting the gross margin 800 basis points to 37% from 28%. The company posted a net loss of $191,000, or 2 cents per diluted share, a marked improvement from a net loss of $1.7 million, or 18 cents per diluted share, in the prior-year quarter.
For fiscal 2025, revenues increased 6% to $58.7 million, while the net loss narrowed to $91,000, or 1 cent per share, from $326,000, or 4 cents per share, in fiscal 2024.
CSP Inc. Price, Consensus and EPS Surprise
CSP Inc. price-consensus-eps-surprise-chart | CSP Inc. Quote
Other Key Business Metrics
A notable shift in revenue mix continued in the quarter. Service revenues jumped 63% year over year in the fiscal fourth quarter and accounted for 44% of the total revenues compared with about 30% in the year-ago period. For fiscal 2025, services represented 36% of the total revenues versus 33% a year earlier, underscoring the company’s increasing emphasis on higher-margin offerings. Product revenues declined year over year in the quarter, but growth in services more than offset that pressure.
The operating loss for the quarter narrowed to $0.5 million from $2 million a year earlier, reflecting the benefits of margin expansion and relatively stable operating expenses. On the balance sheet, CSP ended fiscal 2025 with $27.4 million in cash and cash equivalents, down from $30.6 million a year earlier, while financing receivables increased as the company continued to provide customer financing.
Management Commentary
Management characterized the quarter as a strong finish to the fiscal year, highlighting the role of the Technology Solutions segment in driving both quarterly and full-year growth. Executives emphasized high customer retention across multiple industries and pointed to managed services and cloud offerings as key contributors to the rise in service revenues.
Leadership also discussed expanding the sales organization to capture a larger share of the services market, citing opportunities to build on the double-digit growth achieved in fiscal 2025. In addition, management expressed optimism about increasing adoption of its AZT PROTECT cybersecurity solution, noting a growing pipeline and expanding relationships with strategic partners and distributors.
Factors Influencing Headline Numbers
The most significant factor behind the quarter’s results was rapid growth in service revenues, which carries a higher gross margin than product sales. This shift in mix drove the substantial margin expansion and helped narrow operating and net losses. Research and development expenses rose modestly year over year as the company invested in new features and integrations for AZT PROTECT, while selling, general and administrative costs remained essentially flat.
Management also pointed to continued investment in building a sales pipeline and customer adoption, which weighed on near-term profitability but is intended to support longer-term growth. Additionally, the timing and mix of product sales influenced quarterly comparisons, with lower product revenues partially offset by service strength.
Management View
Management offered qualitative commentary, stating that the company entered the new fiscal year 2026 optimistic about delivering additional growth and improving profitability. Executives indicated expectations for continued momentum in services and increased adoption of AZT PROTECT across industrial and operational technology environments, while acknowledging that the timing of customer rollouts and revenue recognition can be uneven. As a result, management refrained from projecting specific quarterly revenue patterns, emphasizing variability tied to customer deployment schedules.
Other Developments
In the fiscal fourth quarter, CSP’s board declared a quarterly cash dividend of 3 cents per share, payable Jan. 15, 2026, and the company repurchased approximately 19,500 shares for $234,000. The company also highlighted partnerships, including work with Rockwell Automation distributors and an agreement to integrate AZT PROTECT into Acronis’ Cyber Protect solution. These developments reflect efforts to broaden distribution and strengthen market presence rather than acquisitions or divestitures during the period.