CSPi Reports 14.6% Services Revenue Growth, Significantly Expands Gross Margin and Generates FY 2026 First Quarter Profit
Rhea-AI Summary
CSPi (NASDAQ:CSPI) reported fiscal Q1 ended Dec 31, 2025 results: revenue $12.0M, gross margin 39.3%, and net income of $91K ($0.01 diluted). Services revenue rose 14.6%, cash and equivalents were $24.9M, and a $0.03 quarterly dividend was declared payable March 12, 2026.
Management cited strong customer retention, new AZT PROTECT site wins and higher-margin services as drivers of margin improvement despite lower product sales versus year-ago quarter.
Positive
- Services revenue +14.6% year-over-year
- Gross margin 39.3%, up >10% year-over-year
- Reported net income of $91K for fiscal Q1
- Cash and equivalents of $24.9M supporting growth
Negative
- Total revenue declined from $15.7M to $12.0M (-23.6%)
- Product revenue impacted by prior-period $4.5M one-time orders
- Diluted EPS fell from $0.05 to $0.01
Key Figures
Market Reality Check
Peers on Argus
CSPI is down 3.65% with elevated volume, while several peers are also weak: CTM (-4.37%), NOTE (-7.26%), TTEC (-12.37%), WYY (-11.76%). Only TDTH is up (+2.43%). Momentum data flags 2 peers moving down with a median move of about -12.2%, pointing to broader sector pressure.
Historical Context
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Feb 09 | Product capability demo | Positive | -1.6% | Showcased AZT PROTECT for extending Windows 10 OT system life and savings. |
| Feb 06 | Earnings date notice | Neutral | +2.9% | Announced timing and access details for fiscal 2026 Q1 results call. |
| Dec 16 | Q4/FY2025 results | Positive | -15.4% | Reported 11% Q4 revenue growth and margin expansion but full-year small loss. |
| Dec 12 | Earnings date notice | Neutral | -3.2% | Set date and call details for fiscal 2025 Q4 and full-year release. |
| Nov 11 | Industry ranking | Positive | -0.6% | Named #5 cloud computing company in South Florida for IT and cloud services. |
Recent CSPI news with generally positive fundamentals (revenue growth, margin expansion, product milestones) has often been followed by flat to negative price reactions.
Over the last few months, CSPI highlighted AZT PROTECT capabilities and cost savings on Feb 9, 2026, but shares slipped 1.57%. An earnings date announcement on Feb 6, 2026 coincided with a 2.85% gain. Fiscal 2025 Q4 results on Dec 16, 2025 showed 11% revenue growth and gross margin expansion to 37%, yet the stock fell 15.44%. Recognition as a top cloud company on Nov 11, 2025 also saw a small decline. Today’s margin-focused Q1 update follows this pattern of operational progress against a cautious tape.
Market Pulse Summary
This announcement highlights CSPi’s ongoing shift toward higher-margin services, with fiscal Q1 services revenue up 14.6% and gross margin rising to 39.3% despite total revenue falling to $12.0M from $15.7M. The company delivered net income of $91,000, maintained a $0.03 dividend, and reported cash of $24.9M. Recent history shows that even solid operational updates have not always translated into sustained share strength, so monitoring future services mix, AZT PROTECT traction, and profit progression remains important.
Key Terms
proof of concept (poc) technical
AI-generated analysis. Not financial advice.
Strong Customer Retention & New Customers Drive Technology Solutions Business
New Customers Signed for AZT PROTECT as Existing Customers Add Additional Sites
Conference Call Today at 10 a.m. ET
LOWELL, MA / ACCESS Newswire / February 12, 2026 / CSP Inc. (NASDAQ:CSPI), an award-winning provider of security and packet capture products, managed IT and professional services and technology solutions, today announced results, including total gross margin of
Recent Achievements and Operating Highlights
Fiscal first quarter services revenue increased
14.6% as the Company achieved solid customer retention and acquisition to start the fiscal year.Fiscal first quarter gross margin increased more than
10% , reflecting the Company's continued growth of higher margin service revenue.Proof of Concept (PoC) single-site AZT PROTECT engagements proved to be successful as several customers signed orders to expand site deployment since the beginning of fiscal 2026 while the sales pipeline continued to expand.
"We had an encouraging start to the year and the progress we made across our businesses during the quarter positions us favorably for the next three quarters," commented Victor Dellovo, Chief Executive Officer. "While our services revenue grew
"We are also generating positive developments within the AZT PROTECT offering as we added several new initial site customers during the fiscal first quarter. While the revenue contribution from these initial deployments is small, it aligns with our overall strategy to get a foot in the door to prove ourselves and drive revenue. This initiative has begun to bear fruit as we increased orders from existing customers and we now have several enterprises deploying AZT PROTECT at more than one location. We are focused on driving expansion of AZT PROTECT deployment through our distribution partners and further deepen our customer engagements as we move through the year, ensuring that our best-of-class AZT PROTECT is protecting the most sensitive infrastructures, including power and water. We believe the solution remains unmatched in its effectiveness to stop otherwise unprotected attacks on critical operating systems throughout the world."
Fiscal 2025 Fourth Quarter Results
Revenue for the fiscal first quarter ended December 31, 2025 was
Despite the revenue decline, gross profit for the three months ended December 31, 2025 increased slightly to
The Company's balance sheet remained robust, and as of December 31, 2025, had cash and cash equivalents of
Conference Call Details
CSPi Chief Executive Officer Victor Dellovo and Chief Financial Officer Gary W. Levine will host a conference call at 10:00 a.m. (ET) today to review CSPi's financial results and provide a business update. To listen to a live webcast of the call, the event link is https://www.webcaster5.com/Webcast/Page/2912/53620. Individuals also may listen to the call via telephone, by dialing 973-528-0011 or 888-506-0062 and use the Participant Access Code: 482107 when greeted by the live operator. A replay of the webcast will be available for approximately one year on the CSPi website.
About CSPi
CSPi (NASDAQ:CSPI) operates two divisions, each with unique expertise in designing and implementing technology solutions to help customers use technology to success. The High Performance Product division, including ARIA Cybersecurity Solutions, recognizes that better, stronger, more effective cybersecurity starts with a smarter approach. ARIA's solutions provide new ways for organizations to protect their most critical assets-they can shield their critical applications from cyberattack with the AZT solution, while monitoring internal traffic, device-level logs, and alert output with our ARIA ADR solution to substantially improve threat detection and surgically disrupt cyberattacks and data exfiltration. Rounding out the portfolio, Aria's AZT Gateway Software allows us to interrogate network packets at 100mbps line-rate to enforce forwarding and capture policies on the fly. Customers in a range of industries rely on our solutions to accelerate incident response, automate breach detection, and protect their most critical assets and applications-no matter where they are stored, used, or accessed.
CSPi's Technology Solutions division helps clients achieve their business goals and accelerate time to market through innovative IT solutions and professional services by partnering with best-in-class technology providers. For organizations that want the benefits of an IT department without the cost, we offer a robust catalog of Managed IT Services providing 24×365 proactive support. Our team of engineers have expertise across major industries supporting five key technology areas: Advanced Security; Communication and Collaboration; Data Center; Networking; and Wireless & Mobility.
Safe Harbor
The Company wishes to take advantage of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995 with respect to statements that may be deemed to be forward-looking under the Act. Generally, the use of words such as "expect," "intend," "estimate," "believe," "anticipate," "will," "forecast," "outlook", "plan," "project," or similar words identify forward-looking statements that we intend to be included within the safe harbor protections provided by the federal securities laws. However, these words are not the exclusive means of identifying such statements. Although we believe that our plans, intentions, and other expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that we will achieve those plans, intentions, or expectations. All forward-looking statements are subject to risks and uncertainties that may cause actual results or events to differ materially from those that we expected.
Important factors that could cause actual results or events to differ materially from our expectations, or cautionary statements, are disclosed under "Part I. Item 1A. - Risk Factors" included in our most recent Annual Report on Form 10-K and from time to time in our subsequent Quarterly Reports on Form 10-Q and our other US Securities and Exchange Commission ("SEC") filings and public communications.
All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by those cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.
We caution you that the important factors referenced above may not reflect all of the factors that could cause actual results or events to differ from our expectations. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
CONTACT:
CSP Inc.
Gary Levine, 978-954-5040
Chief Financial Officer
CSP INC. AND SUBSIDIARIES | ||||||||
CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS | ||||||||
(Amounts in thousands) | ||||||||
December 31, 2025 | September 30, 2025 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 24,928 | $ | 27,418 | ||||
Accounts receivable, net | 11,786 | 12,000 | ||||||
Financing receivables, net | 7,714 | 8,939 | ||||||
Inventories | 2,366 | 1,442 | ||||||
Other current assets | 2,362 | 2,521 | ||||||
Total current assets | 49,156 | 52,320 | ||||||
Financing receivables due after one year, net | 7,424 | 5,965 | ||||||
Cash surrender value of life insurance | 5,877 | 5,845 | ||||||
Other assets | 6,697 | 7,033 | ||||||
Total assets | $ | 69,154 | $ | 71,163 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities | $ | 17,856 | $ | 22,183 | ||||
Pension and retirement plans | 1,202 | 1,219 | ||||||
Other non-current liabilities | 5,286 | 3,210 | ||||||
Shareholders' equity | 44,810 | 44,551 | ||||||
Total liabilities and shareholders' equity | $ | 69,154 | $ | 71,163 | ||||
CSP INC. AND SUBSIDIARIES | ||||||||
CONDENSED UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(Amounts in thousands, except per share data ) | ||||||||
Three months ended | ||||||||
December 31, | December 31, | |||||||
2025 | 2024 | |||||||
Sales: | ||||||||
Product | $ | 6,701 | $ | 11,015 | ||||
Services | 5,335 | 4,655 | ||||||
Total sales | 12,036 | 15,670 | ||||||
Cost of sales: | ||||||||
Product | 5,282 | 9,119 | ||||||
Services | 2,019 | 1,987 | ||||||
Total cost of sales | 7,301 | 11,106 | ||||||
Gross profit | 4,735 | 4,564 | ||||||
Operating expenses: | ||||||||
Engineering and development | 858 | 786 | ||||||
Selling, general and administrative | 3,989 | 4,132 | ||||||
Total operating expenses | 4,847 | 4,918 | ||||||
Operating loss | (112 | ) | (354 | ) | ||||
Other income, net | 483 | 711 | ||||||
Income before income taxes | 371 | 357 | ||||||
Income tax expense (benefit) | 280 | (115 | ) | |||||
Net income | $ | 91 | $ | 472 | ||||
Net income attributable to common shareholders | $ | 86 | $ | 438 | ||||
Net income per common share - basic | $ | 0.01 | $ | 0.05 | ||||
Weighted average shares outstanding - basic | 9,442 | 9,124 | ||||||
Net income per common share - diluted | $ | 0.01 | $ | 0.05 | ||||
Weighted average shares outstanding net income - diluted | 9,683 | 9,619 | ||||||
SOURCE: CSP, Inc.
View the original press release on ACCESS Newswire
FAQ
What were CSPi (CSPI) fiscal Q1 2026 results announced February 12, 2026?
Why did CSPi (CSPI) gross margin improve to 39.3% in Q1 2026?
How did CSPi (CSPI) services revenue perform in the quarter ended December 31, 2025?
What caused CSPi (CSPI) total revenue to decline year-over-year in Q1 2026?
What shareholder actions did CSPi (CSPI) announce with its February 12, 2026 results?
