CSP Inc Q4 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joseph Nerges - Segren Investments - Analyst : Good morning, guys. How are you today?

Question: Joseph Nerges - Segren Investments - Analyst : My quick math here, you mentioned that the service revenue in the fourth quarter was like 44% of total sales, so that if my math is correct, you're close to $6.4 million in service revenue in the quarter alone. Is that -- am I correct? Am I wrong on that map?

Question: Joseph Nerges - Segren Investments - Analyst : Yeah, well, you said -- I don't know, 44% of $14.5 million. That's where I -- that's where I'm coming up with the number. So that's a terrific number. I mean, I -- being at the annual meeting several years ago, and Victor mentioned that that he gets calls and all the time trying to purchase our managed services operation. So if we continue with that, we're talking about a plus $20 million a year service revenue just in managed services alone, in the TS division, so that that's really terrific. But let me get on to a question. I really think this -- the last press release you guys issued on the IIoT, expansion of AZT PROTECT is really -- you used the term -- Victor used the term game changer when he first introduced AZT PROTECT, and I really believe that this expansion is a game changer now. As an example, I guess this all started basically with our -- am I correct, the cell tower customer in South Africa where we deployed that and then we began deploying it through other suppliers in that environment. And then we kept talking about the black box. So as an example, if you have a cell tower customer with, let's say 1,000 towers, what's the -- what is our potential for the end point? How many endpoints we possibly sign up and if it's fully deployed and accepted by customers down the line would, let's say, a size of $1,000?

Question: Joseph Nerges - Segren Investments - Analyst : Well -- but obviously, you could -- we're just talking about one cell tower customer here. How many other customers could we possibly integrate? Have we signed -- have we currently signed any OEM agreements in the IIoT environment? I mean, these -- the guy that's -- the supplier of the black boxes, he would be, I assume, a potential OEM supplier for the IIOT market. Have we signed contracts with these people as of yet for OEM deployment?

Question: Joseph Nerges - Segren Investments - Analyst : Not yet, so that would be the next stage. And I'm assuming that that's a priority for our sales team going forward is signing up as many of these OEM suppliers as possible. Am I correct or am I wrong in that that you would be focusing on it? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 16, 2025 / 3:00PM, CSPI.OQ - Q4 2025 CSP Inc Earnings Call

Question: Joseph Nerges - Segren Investments - Analyst : Okay. All right, well, I think, I think the numbers are great. I realize I know what the problem is. It's simply that we need the time to get rollouts, full rollouts in some of our customers. I'm assuming our only full rollout of AZT PROTECT is in our pharmaceutical company. Most of the other customers we have, have deployed it in individual plants or equipment but not fully roll them out. So when you're saying that you're expecting the full rollouts over the next one to two years, I assume that's what you're talking about.

Question: Joseph Nerges - Segren Investments - Analyst : Yeah, one more follow-up on that, and I'm assuming that all of these potential customers already have contracts signed in their OT environment, cybersecurity contracts. So am I correct in some of these customers might be waiting for that contract to expire before they enter a new contract with a new supplier like us?

Question: Joseph Nerges - Segren Investments - Analyst : All right. Well, thanks a lot. I appreciate the answers, and good luck going forward. Sounds like '26 could be a really good year for us. Thanks, guys.

Question: Joseph Nerges - Segren Investments - Analyst : Yes, except for one thing. I came back with a cold, and I still have it. I'm still trying to get rid of the cold, so -- but the show is really good. A lot of customers came by, and they seemed pretty well engaged now. Closing these guys is not a story, but the numbers are there to -- from what I saw to hopefully get some pretty serious contracts in the not-too-distant future. So yes, I appreciate the inviting me to the show. Anyway, thank you.

Question: William Lauber - Visionary Wealth Advisors LLC - Analyst : Hi, just had a couple of questions. I guess, I was at that Rockwell show as well for, I guess, a day and a morning, so I didn't get to see the whole thing. But I definitely saw quite a bit of traffic in the time I was there. If I kind of remember right, most of the customers that you guys have gotten over the last year, the connections were made at that Rockwell show a year ago. Is that true?

Question: William Lauber - Visionary Wealth Advisors LLC - Analyst : Okay, and then can you kind of quantify the number of leads you got last year versus this year? And then I guess along with that, maybe the quality of leads, I assume it's probably better this time because I noticed a number of your distributors bringing their customers to the booth. So if that's a lot better than just some random person walking by your booth and talking to you.

Question: William Lauber - Visionary Wealth Advisors LLC - Analyst : Okay, yeah, that was more leads than I thought, so that's good.

Question: William Lauber - Visionary Wealth Advisors LLC - Analyst : It was good. And then, I know -- I mean, you guys had probably one of the smaller booths, and I'm sure that cost you quite a bit. But I think it's probably money well spent, generating all those leads.

Question: William Lauber - Visionary Wealth Advisors LLC - Analyst : Okay, that's all I have right now. Thanks.

Question: Brett Davidson - Investletter - Analyst : Good morning, gentlemen. Happy holidays.

Question: Brett Davidson - Investletter - Analyst : Yeah, thank you. I want to turn back to the fog surrounding the Acronus or Acronis or however their name's pronounced. So I understand that a lot of this is endpoint protected, the revenue generation. How does that work with the Acronis device? Who are you going to be recognizing the revenue from? Is that coming from Acronis, or is that coming from their end user? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 16, 2025 / 3:00PM, CSPI.OQ - Q4 2025 CSP Inc Earnings Call

Question: Brett Davidson - Investletter - Analyst : So is this going to go on every --

Question: Brett Davidson - Investletter - Analyst : Is this going to go on every one of those devices that they're producing, or is it going to be based on what their customer wants? Or this is automatically going to be thrown on their devices?

Question: Brett Davidson - Investletter - Analyst : And it's going to work similar. This is going to be like a subscription-type thing that'll renew at some point? Perfect. All right. And the only other thing that I had questions on was regarding the revenue next year. Is this something where we could reasonably expect incremental increases in revenue throughout the year, or it's just so all over the place that you just don't have that kind of insight into what -- how this is going to play out?

Question: Brett Davidson - Investletter - Analyst : Okay, fair enough. Okay, well that's all I got. Thanks so much.