Q1 2026 CSP Inc Earnings Call

February 12, 2026

Speaker #1: Greetings. Welcome to the CSP's first quarter fiscal year 2026 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.

Operator: Greetings. Welcome to the CSPi's first quarter fiscal year 2026 conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Michael Polyviou. You may begin.

Speaker #1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Michael Polyviou.

Speaker #1: You may begin.

Speaker #2: Great. Thank you. Hello, everyone, and thank you for joining us to review CSP's initial results for the fiscal 2026 first quarter, which ended on December 31, 2025, as well as recent operating developments.

Michael Polyviou: Great. Thank you. Hello, everyone, and thank you for joining us to review CSPi's initial results for the fiscal 2026 Q1, which ended on December 31, 2025, as well as recent operating developments. Today with me on the call is Victor Dellovo, CSPi's Chief Executive Officer, and Gary Levine, CSPi's Chief Financial Officer. After Victor and Gary conclude their opening remarks, we'll then open the call for questions. During the Q&A session, we ask participants to limit themselves to one question and one follow-up question, then requeue if you have additional questions. Statements made by CSPi's management in today's call regarding the company's business that are not historical facts may be forward-looking statements as those identified in federal securities laws. The words may, will, expect, believe, anticipate, project, plan, intend, estimate, and continue, as well as similar expressions, are intended to identify forward-looking statements.

Speaker #2: Today with me on the call is Victor Dellovo, CSP's Chief Executive Officer and Gary Levine, CSP's Chief Financial Officer. After Victor and Gary conclude their opening remarks, we'll then open the call for questions.

Speaker #2: During the Q&A session, we ask participants to limit themselves to one question and one follow-up question, then requeue if you have additional questions. Statements made by CSP's management on today's call regarding the company's business that are not historical facts may be forward-looking statements as those identified in federal securities laws, the words may, will, expect, believe, anticipate, project, plan, intend, estimate, and continue as well as similar expressions are intended to identify forward-looking statements.

Speaker #2: Forward-looking statements should not be meant as a guarantee of future performance or results. The company cautions you that these statements reflect the current expectations about the company's future performance or events and are subject to several uncertainties, risks, and other influences, many of which are beyond the company's control that may influence the accuracy of the statements and the projections upon which the segment and the statements are based.

Michael Polyviou: Forward-looking statements should not be meant as a guarantee of future performance or results. The company cautions you that these statements reflect the current expectations about the company's future performance or events and are subject to several uncertainties, risks, and other influences, many of which are beyond the company's control, that may influence the accuracy of the statements and the projections upon which the segment and the statements are based. Factors that may affect the company's results include, but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10-K and the quarterly report on Form 10-Q, filed with the Securities and Exchange Commission. Forward-looking statements are based on the information available at the time those statements are made and management's good faith belief as of the time with respect to future events.

Speaker #2: Factors that may affect the company's results include, but are not limited to, the risks and uncertainties discussed in the Risk Factors section of the annual report on Form 10-K and the quarterly report on Form 10-Q filed with the Securities and Exchange Commission.

Speaker #2: Forward-looking statements are based on the information available at the time those statements are made and management's good faith believe as of the time with respect to future events.

Speaker #2: All forward-looking statements are qualified in their entirety by this cautionary statement in CSP undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information or future events or otherwise after the date thereof.

Michael Polyviou: All forward-looking statements are qualified in their entirety by this cautionary statement, and CSPi undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise after the date thereof. With that, I'll turn the call over to Victor Dellovo, Chief Executive Officer. Victor, please go ahead.

Speaker #2: With that, I'll turn the call over to Victor Dellovo, Chief Executive Officer. Victor, please go ahead.

Speaker #3: Thank you, Michael and good morning, everyone. As expected, our first quarter product revenue compared to prior year period reflects tough year-over-year comparables, which obscures the progress we made; we continue to make executing on CSP's core growth strategies in building long-term shareholder value.

Victor Dellovo: Thank you, Michael, and good morning, everyone. As expected, our Q1 product revenue compared to prior-year period reflects tough year-over-year comparables, which obscures the progress we make. We continue to make executing on CSPi's core growth strategies in building long-term shareholder value. In the year-ago quarter, we recorded approximately $4.5 million in a one-time product deal that did not repeat in fiscal Q1, 2026, resulting in the decline in total revenue. As I've emphasized on prior calls, our strategic focus is on expanding service revenue and growing our MRR base. In the Q1, service revenue, driven by ongoing momentum in the technology solution and managed service practice, grew 14.6%. This strength translated into a meaningful improvement in our overall gross margins, which reached 39.3%.

Speaker #3: In the year ago quarter, we recorded approximately $4.5 million in a one-time product deal that did not repeat in fiscal Q1 2026. Resulting in the decline in total revenue.

Speaker #3: As I've emphasized on prior calls, our strategic focus is on expanding service revenue, in growing our MRR base. In the first quarter, service revenue driven by ongoing momentum in the technology solution and managed service practice grew 14.6%.

Speaker #3: This strength translated into a meaningful improvement in our overall gross margins, which reached 39.3%. The higher margin profile contributed to a $171,000 increase in gross profit versus the prior year period.

Victor Dellovo: The higher margin profile contributed to a $171,000 increase in gross profit versus the prior year period. We also continued to gain traction in the market with our differentiated and award-winning AZT PROTECT cybersecurity solution, supported by both new customer wins and multi-site expansion with existing customers. Overall, our fiscal Q1 results reinforce our confidence that fiscal 2026 is shaping up to be a growth year for CSPi. Our technology solution business continues to lead our progress. Our offerings increase the efficiency and effectiveness of our customers' IT investments in networking, wireless mobility, unified communication and collaboration, data centers, and advanced technology security. While all our TS services are performing to plan, our managed cloud and managed service practice continue to excel.

Speaker #3: We also continue to gain traction in the market with a differentiated and award-winning AZT Protect cybersecurity solution. Supported by both new customer wins and multi-site expansion with existing customers.

Speaker #3: Overall, our fiscal first quarter results reinforce our confidence that fiscal 2026 is shaping up to be a growth year for CSPI. A technology solution business continues to lead our progress.

Speaker #3: Our offerings increase the efficiency and effectiveness of our customers' IT investments in networking, wireless mobility, unified communication, and collaboration, as well as data centers and advanced technology security.

Speaker #3: And while all our TS services are performing to plan, our managed cloud and managed service practice continue to excel. We have benefiting from the ever-expanding business and organizational migration to the cloud and the increased trends for enterprise of all sizes to acquire operation support required once the migration is complete.

Victor Dellovo: We are benefiting from the ever-expanding business in organizational migration to the cloud and the increased trends for enterprises of all sizes to acquire operational support services once the migration is complete. The primary factor behind this market driver is the growing complexity of the cloud and the unique and specific needs of each enterprise. Microsoft, through its Azure offering, is considered to be the market leader in this space, and our MSP practice is a platinum partner with the company. During our last call with you in December, we mentioned the increased investments we were making in the managed service practice. We have already begun to generate returns from the investment through the signing of new customers. In Q1, we signed new MSP customers that will generate nearly $100,000 in monthly revenue commencing this quarter.

Speaker #3: A primary factor behind this market driver is the growing complexity of the cloud and the unique and specific needs of each enterprise. Microsoft through its Azure offering is considered to be the market leader in this space, and our MSP practice is a platinum partner with the company.

Speaker #3: During our last call with you in December, we mentioned the increased investments we were making in the managed service practice. We have already begun to generate returns from the investment through the signing of new customers.

Speaker #3: In Q1, we signed new MSP customers that will generate nearly $6 figures in monthly revenue, commencing this quarter. This traction has continued into the second fiscal quarter as we look forward over the remainder of the year.

Victor Dellovo: This traction has continued into Q2 as we look forward, look out over the remainder of the year. We believe our service segment momentum can continue. Meanwhile, based on our best-in-class services, our customers' retention rate remains extremely high, contributing to expanding our gross margins in the service segment. We also achieved meaningful traction with our AZT PROTECT product suite in Q1, delivering year-over-year revenue growth while we are still progressing towards the full market opportunity for our cybersecurity solutions. The quarter reflected several encouraging developments. We secured multiple new site customers for AZT, and through our strategic partnership and distribution, continued to expand our pipeline of prospective deployments. Despite being in the market with the ARIA AZT for just over a year, we now serve over 46 unique customers, some of whom have multi-site installations on the way, in addition, and additional expansion opportunities.

Speaker #3: We believe our service segment momentum can continue. Meanwhile, based on our best-in-class services, our customers' retention rate remains extremely high, contributing to expanding our gross margins in the service segment.

Speaker #3: We also achieved meaningful traction with our AZT Protect product suite in the first quarter. Delivering year-over-year revenue growth while we are still progressing towards the full market opportunity for our cybersecurity solutions.

Speaker #3: The quarter reflected several encouraging developments. We secured multiple new site customers for AZT and through our strategic partnership and distribution continue to expand our pipeline of prospective deployments.

Speaker #3: Despite being in the market with the RA AZT for just over a year, we now serve over 46 unique customers, some of whom have multi-site installations on the way and additional expansion opportunities.

Speaker #3: These customers span a broad range of verticals including steel, energy, manufacturing, water utilities, pharmaceuticals, food, and telecommunication. Importantly, many of the highest value multi-site opportunities each with potential to develop into seven-figure relationships remain ahead of us as customers advance through their respective procurement and deployment processes.

Victor Dellovo: These customers span a broad range of verticals, including steel, energy, manufacturing, water utilities, pharmaceuticals, food, and telecommunication. Importantly, many of the highest value multi-site opportunities, each with potential to develop into seven-figure relationships, remain ahead of us as customers advance through their respective procurement and deployment processes. We have already received approval-

Speaker #3: We have already received approval.

Michael Polyviou: Hello? I believe we may have lost Vic. Gary, are you there?

Speaker #4: I believe we may have lost Vic. Gary, are you there?

Speaker #5: Yeah, I'm here.

Victor Dellovo: Yeah, I'm here.

Speaker #4: All right, ladies and gentlemen, please stand by. We'll get Victor back on the phone.

Michael Polyviou: Let's.

Operator 1: We still have Victor's line connected.

Operator: We still have Victor's line connected.

Michael Polyviou: Ladies and gentlemen, please stand by. We'll get Victor back on the phone.

Speaker #5: Yep.

Victor Dellovo: Yeah.

Speaker #6: One moment, please. I still see his line connected. I will reconnect it again. One moment, please.

Operator 1: One moment, please. I still see his line connected. I will reconnect it again. One moment, please.

Operator: One moment, please. I still see his line connected. I will reconnect it again. One moment, please.

Speaker #5: Yep.

Victor Dellovo: Yep.

Michael Polyviou: Again, please stand by. We're trying to get Victor back on the phone here.

Speaker #4: Again, please stand by. We're trying to get Victor back on the phone here.

Victor Dellovo: Hello?

Speaker #5: Hello? Victor? Hello?

Michael Polyviou: Victor, hello here.

Speaker #7: Hear us how CSPI Technology Solutions professional services can transform your IT challenges into a business advantage. We offer five core areas of expertise, including networking.

[Company Representative] (CSP Inc): How CSPi Technology Solutions professional services can transform your IT challenges into a business advantage. We offer five core areas of expertise, including networking-

Michael Polyviou: ... Yeah, Gary, if we could be cleaned up by.

Speaker #5: Yes, Gary, I think it'd be cool.

Speaker #7: Wireless mobility, unified communication.

Victor Dellovo: Yeah, you want me to go? I'll go.

Speaker #5: Gary, you want me to go? I'll go.

Speaker #7: Operation, data center solutions, and advanced security.

[Company Representative] (CSP Inc): Data center solutions and advanced security.

Speaker #8: Your IT infrastructure is the backbone of your business. But managing and maintaining multiple missions.

Operator 1: Your IT infrastructure is the backbone of your business, but managing and maintaining multiple mission-

Operator: Your IT infrastructure is the backbone of your business, but managing and maintaining multiple mission-

Speaker #4: Gary, perhaps if we can't get Victor back on the phone, shall we continue? Victor's coming?

Michael Polyviou: Gary, perhaps, if we can't get Victor back on the phone, shall we continue?

Speaker #8: Can strain your resources.

Operator 1: Can strain your resources-

Operator: Can strain your resources-

Speaker #4: Can you take it over?

Michael Polyviou: You can take it over?

Operator 1: Get in the way of executing your core business and IT strategy. CSPi Technology Solutions Managed Services team can customize. We have Victor's line connected.

Speaker #8: And get in the way of executing your core business and IT strategy. CSPI Technology Solutions manage services team can customize.

Operator: Get in the way of executing your core business and IT strategy. CSPi Technology Solutions Managed Services team can customize. We have Victor's line connected.

Speaker #6: We have Victor's line connected.

Speaker #4: All right.

Victor Dellovo: All right. Hey, Michael, where did we leave off? I didn't realize we dropped.

Speaker #7: Hey, Michael, where did we leave off? I didn't realize we dropped.

Speaker #5: Yeah, why don't we just pick up on—well, Victor, it's probably easier if we just pick up from the beginning. If not, we could pick up at the top of page two.

Michael Polyviou: Yeah, why don't we, why don't we just pick up on... Well, Victor, it's probably easier if we just pick up from the beginning. If not, we could pick up on the top of page two.

Speaker #7: Okay.

Victor Dellovo: Okay.

Speaker #5: Let's talk technology solutions business. Yeah.

Michael Polyviou: Let's talk on technology solutions business. Yeah.

Speaker #7: Sounds good. Sorry about that, everyone. Our technology solution business continues to lead our progress. Our offerings increase the efficiency and effectiveness of our customers' IT investments in networking, wireless, mobility, unified communication, and collaboration.

Victor Dellovo: Sounds good. Sorry about that, everyone. Our technology solution business continues to lead our progress. Our offerings increase the efficiency and effectiveness of our customers' IT investments in networking, wireless, mobility, unified communication and collaboration, data centers, and advanced technology security. And while all our CSP services are performing to plan, our managed cloud and managed service practice continue to excel. We are benefiting from the ever-expanding business in organizational migration to the cloud and the increasing trend for enterprises of all sizes to acquire operation support required once the migration is complete. A primary factor behind the market driver is the growing complexity of cloud and unique and specific needs of each enterprise. Microsoft, through its Azure offering, is considered to be the market leader in this space, and our MSP practice is a platinum partner with the company.

Speaker #7: Data centers and advanced technology security. And while all our TS services are performing to plan, our managed cloud and managed service practice continue to excel.

Speaker #7: We are benefiting from the ever-expanding business and organizational migration to the cloud and the increasing trend for enterprises of all sizes to acquire operations support required once the migration is complete.

Speaker #7: A primary factor behind the market driver is the growing complexity of cloud and unique and specific needs of each enterprise. Microsoft through its Azure offering is considered to be the market leader in this space.

Speaker #7: And our MSP practice is a Platinum Partner with the company. During our last call with you in December, we mentioned the increased investment we were making in the managed service practice.

Victor Dellovo: During our last call with you in December, we mentioned the increased investment we were making in the managed service practice, and we have already begun to generate returns from that investment through the signing of new customers. In Q1, we signed new MSP customers that will generate nearly six figures in monthly revenue commencing this quarter. This traction has continued into the second fiscal quarter, and we look out over the remaining of the year, and we believe our service segment momentum can continue. Meanwhile, based on our best-in-class services, our customer retention rate remains extremely high, contributing to our expanding gross margin in the service segment. We also achieved meaningful traction with our AZT PROTECT product suite in the first quarter, delivering year-over-year revenue growth. While we are still progressing towards the full market opportunity for our cybersecurity solution, the quarter reflects several encouraging developments.

Speaker #7: And we have already begun to generate returns from that investment through the signing of new customers. In Q1, we signed new MSP customers that will generate nearly six-figure a monthly revenue commencing this quarter.

Speaker #7: Distraction has continued into the second fiscal quarter, and we look over the remaining of the year, and we believe our service segment momentum can continue.

Speaker #7: Meanwhile, based on our best-in-class services, our customer retention rate remains extremely high, contributing to our expanding gross margin in the service segment. We also achieved meaningful traction with our AZT Protect product suite in the first quarter.

Speaker #7: Delivering year-over-year revenue growth. While we are still progressing towards the full market opportunity, for our cybersecurity solution, the quarter reflects several encouraging developments. We secured multiple new sites, initial site customers for AZT Protect, and through our strategic partnership in distribution, continue to expand our pipeline of prospective deployments.

Victor Dellovo: We secured multiple new initial site customers for AZT PROTECT, and through our strategic partnership and distribution, continue to expand our pipeline of prospective deployments. Despite having been in the market with AZT for just over a year, we are now serving 46 unique customers, some of who have multi-site installations on the way and additional expansion opportunities. These customers span a broad range of verticals, including steel, energy, manufacturing, water, utilities, pharmaceutical, food, and telecommunication. Importantly, many of the highest-value multi-site opportunities, each with the potential to develop into seven-figure relationships, remain ahead of us as customers advance through their respective procurement and deployment process. We have already received approval to proceed at several second and third sites, and our team is focused on rapid execution to demonstrate the substantial value AZT PROTECT delivers in preventing cyberattacks that otherwise can disrupt operations for hours, days, or even weeks.

Speaker #7: Despite having been in the market with AZT for just over a year, we are now serving 46 unique customers, some of whom have multi-site installations underway and additional expansion opportunities.

Speaker #7: These customers span a broad range of verticals, including steel, energy, manufacturing, water, utilities, pharmaceutical, food, and telecommunication. Importantly, many of the highest value multi-site opportunities each with the potential to develop into seven-figure relationships remain ahead of us as customers procurement and deployment process.

Speaker #7: We have already received approval to proceed at several second and third sites in our team is focused on rapid execution to demonstrate the substantial value AZT Protect delivers in preventing cyber attacks that otherwise can disrupt operations for our days or even weeks.

Speaker #7: The case studies developed from our initial industry installations are helpful getting our target customers to understand how exposed they are to operational disasters. And how AZT Protect's uniquely acts to prevent such disaster.

Victor Dellovo: The case studies developed from our initial industry installations are helpful in getting our target customers to understand how exposed they are to operational disasters and how AZT PROTECT uniquely acts to prevent such disaster. For some, they are learning of the risk as operational technology customers continue to lack effective cybersecurity protection at the level AZT PROTECT provides. Unfortunately, for many, they don't realize their exposure until it's too late, and they are exposed. We continue to believe we have a strong competitive advantage in this space and believe that the market is starting to see us as a resource. The unique procurement process and development criteria for each customer previously mentioned has resulted in various timing delays, which we continue to work through. Our team is resilient and committed, and we aren't letting up.

Speaker #7: For some, they are learning of the risk as operational technology customers continue to lack effective cybersecurity protection at the level AZT Protect provides. Unfortunately, for many, they don't realize their exposure until it's too late.

Speaker #7: And they are exposed. We continue to believe we have a strong competitive advantage in the space and believe that the market is starting to see us as a resource.

Speaker #7: The unique procurement process and development criteria for each customer previously mentioned has resulted in various timing delays, which we continue to work through. Our team is resilient and committed, and we are not letting up.

Speaker #7: We continue to believe the effort will result in sizable AZT Protect sales for the fiscal year unfolds. In addition to expanding direct pipeline, we are advancing strategic OEM relationships.

Victor Dellovo: We continue to believe the effort will result in sizable AZT PROTECT sales as the fiscal year unfolds. In addition to expanding direct pipeline, we are advancing strategic OEM relationships, most notably with Acronis, as they work to embed AZT PROTECT into their platform. While these integrations require time to mature, they represent highly scalable opportunities with substantial long-term potential. We also conducted our first webinar this quarter with Acronis, which drew nearly 200 attendees and generated more than 12 demo requests. Engagement levels were strong, reinforcing our view that this go-to-market motion will be an important contributor to our long-term growth trajectory. In summary, we are off to a solid start for the fiscal year, with particularly strong performance in our service business.

Speaker #7: Most notably, with Acronis. As they work to embed AZT Protect into their platform while these integrations require time to mature, they represent highly scalable opportunities with substantial long-term potential.

Speaker #7: We also conducted our first webinar this quarter with Acronis. Which drew nearly 200 attendees and generated more than a dozen demo requests. Engagement levels were strong, reinforcing our view that this go-to-market motion will be an important contributor to our long-term growth trajectory.

Speaker #7: In summary, we are off to a solid start for the fiscal year. But particularly strong performance in our service business. We believe we remain on track to deliver steady, profitable improvements throughout the fiscal 2026.

Victor Dellovo: We believe we remain on track to deliver steady, profitable improvements throughout fiscal 2026, supported by the infrastructure investments we have put in place to enable meaningful scale. As a result, we expect to generate substantial operating leverage as revenue grows. With that, I will turn the call over to Gary to discuss our recent financial results in more detail. Gary?

Speaker #7: Supported by the infrastructure investments we are putting in place to enable meaningful scale. As a result, we expect to generate substantial operating leverage as revenue grows.

Speaker #7: With that, I will turn the call over to Gary to discuss our recent financial results in more detail. Gary?

Speaker #5: Thanks, Victor. For the fiscal first quarter ended December 31st, 2025, we generated $12 million in revenue as compared to $15.7 million for the year ago fiscal first quarter.

Gary Levine: Thanks, Victor. For the fiscal first quarter ended December 31, 2025, we generated $12 million in revenue, as compared to $15.7 million for the year ago fiscal first quarter. Product revenue for the fiscal first quarter of 20, of 2025 was $6.7 million, compared to product revenue of $11 million for, for the fiscal first quarter of 2025. Last year's revenue total for the quarter included several one-time transactions with customers totaling approximately $4.5 million, and we didn't have any product orders of that magnitude in the first quarter of this year. Service revenue for the first fiscal quarter increased 14.6% to $5.3 million, from $4.7 million in the year ago fiscal first quarter.

Speaker #5: Product revenue for the fiscal first quarter of 2025 was $6.7 million, compared to product revenue of $11 million. For the fiscal first quarter of 2025.

Speaker #5: Last year's revenue total for the quarter included several one-time transactions with customers totaling approximately $4.5 million and we didn't have any product orders of that magnitude in the first quarter of this year.

Speaker #5: Service revenue for the first fiscal quarter increased $14.6% to $5.3 million. From $4.7 million in the year ago fiscal first quarter. Gross profit for the fiscal first quarter was $4.7 million versus $4.6 million during the fiscal first quarter of 2025.

Gary Levine: Gross profit for the fiscal first quarter was $4.7 million versus $4.6 million during the fiscal first quarter of 2025. The solid service revenue growth and mix during the quarter drove the gross profit margin increase. Gross profit margins for the first quarter was 39.3% of sales, which was slightly more than 10% higher than the gross margin for the prior fiscal first quarter of 29.1%. Research and development expenses increased 9.2%, or $858,000, compared to the same period of the prior year, as we supported the customization of the AZT PROTECT deployments and OEM embedding developments. Sales, general, and administrative expenses for the fiscal first quarter declined $143,000 to $4 million for the year-ago first fiscal quarter.

Speaker #5: The solid services revenue growth in mix during the quarter drove the gross profit margin increase. Gross profit margin for the first quarter was 39.3% of sales.

Speaker #5: Which was slightly more than 10% higher than the gross margin for the prior fiscal first quarter of 29.1%. Energy and development expenses increased $9.2% or $858,000 compared to the same period of prior year.

Speaker #5: As we supported the customization of the AZT Protect deployments and OEM embedding developments. Sales in general and administrative expenses for the fiscal first quarter declined $143,000 to $4 million.

Speaker #5: For the year ago first fiscal quarter. The company had increased interest income that increased 23% over the prior year on our financing deals and interest on our cash.

Gary Levine: The company had increased interest income that increased 23% over the prior year on our financing deals and interest on our cash. The company recorded a tax expense of $280,000, which represented a year-to-date effective tax rate of 75.5%. The differential between the company's effective tax rate year to date and the US statutory tax rate of 21% is primarily due to state income taxes, changes in the valuation allowance maintained against certain state credits, and nondeductible executive compensation. Net income for the Q1 of fiscal year 2026 was $91,000, compared to $42,000 in the prior year period. Diluted earnings per common share was $0.01, compared to $0.05 in the prior year Q1.

Speaker #5: The company recorded a tax expense of $280,000. Which represented a year-to-date effective tax rate of 75.5%. The differential between the company's effective tax rate year-to-date and the US statutory tax rate of 21% is primarily due to state income taxes changes in the valuation allowance maintained against certain state credits and non-deductible executive compensation.

Speaker #5: Net income for the first quarter of fiscal year 2026 was $91,000 compared to $42,000 in the prior year period. Diluted earnings per common share was $0.01 compared to $0.05 in the prior year first quarter.

Speaker #5: As of December 31, 2025, our balance sheet remained strong, with cash and cash equivalents of $24.9 million. We would also like to point out that the decrease in cash from September 30, 2025, was primarily related to several financing deals that we closed in Q1 26.

Gary Levine: As of 31 December 2025, our balance sheet remains strong, with cash and cash equivalents of $24.9 million. We would also like to point out that the decrease in cash from 30 September 2025 was primarily related to several financing deals that we closed in Q1 2026, and we are to collect approximately $3.3 million from financing payments scheduled during the next two quarters. As we noted in the press release this morning, we will be paying a dividend of $0.03 per share on 12 March 2026 to shareholders record of 26 February 2026. With that, I will turn it over to the operator for your questions.

Speaker #5: And we are to collect approximately $3.3 million from financing payments scheduled during the next two quarters. As we noted in the press release, this morning, we will be paying a dividend of $0.03 per share on March 12th to shareholders' record of February 26th.

Speaker #5: With that, I will turn it over to the operator for your questions.

Speaker #1: Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator: Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question for today is from Joseph Nergis with Seagram Investment.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker #1: Your first question for today is from Joseph Nurgis with Seagram Investment.

Speaker #6: Hello. Good morning, guys. How are you? How are you doing?

Joseph Nerges: Hello. Good morning, guys. How are you?

Operator: Hello. Good morning, guys. How are you?

Gary Levine: Good morning, Joe.

Victor Dellovo: How are you doing?

Joseph Nerges: Okay, a quick accounting question. We keep talking about service revenue. Do we have two categories for service revenue when you talk service revenue, are we talking managed services? Are we talking services beyond managed services? So, is there two categories or just one category for services revenue? Do you understand my question?

Speaker #7: Okay. A quick accounting question. We keep talking about service revenue. Do we have two categories for service revenue? When you talk service revenue, are we talking managed services?

Victor Dellovo: Okay, a quick accounting question. We keep talking about service revenue. Do we have two categories for service revenue when you talk service revenue, are we talking managed services? Are we talking services beyond managed services? So, is there two categories or just one category for services revenue? Do you understand my question?

Speaker #7: Are we talking services beyond managed services? Is there two categories or just one category? For services revenue? Do you understand my question?

Speaker #6: It's multiple, Jeff. Yeah. Yeah. Multiple items, Joe. It's not just one.

Gary Levine: Multiple, Joe. Yeah, it's... Yeah, multiple items, Joe.

Joseph Nerges: Okay, so-

Gary Levine: Okay, so-

Gary Levine: It's not just one.

Speaker #7: All right. So then, what are we talking about for managed services? For the quarter, I think you said—did you say $5.3 million? Is that correct?

Joseph Nerges: All right, so then what are we talking about for managed services for the quarter? I think you said, did you say $5.3 million? Is that correct?

Gary Levine: All right, so then what are we talking about for managed services for the quarter? I think you said, did you say $5.3 million? Is that correct?

Speaker #6: Correct.

Gary Levine: Correct.

Joseph Nerges: The managed services portion of our services revenue for the first quarter.

Gary Levine: The managed services portion of our services revenue for the first quarter.

Speaker #7: The managed services portion of our services revenue for the first quarter.

Speaker #6: Well, that's the total service revenues inclusive of the TS division as well as the yeah. AZT.

Gary Levine: Well, that's the total service revenue is inclusive of, you know, the TS division as well as, yeah, AZT.

Joseph Nerges: Ok-okay, so-

Gary Levine: Ok-okay, so-

Speaker #7: Okay. So we don't break it out, Joe. Joe, we don't break it out. Okay. You're not breaking out between TS and thing. I'm just trying to understand how much of our managed how much revenue in managed services do we have?

Victor Dellovo: We don't break it out, Joe. Joe, we don't break it out.

Joseph Nerges: You don't break... Okay, you're not breaking it out between TS and-

Victor Dellovo: You don't break... Okay, you're not breaking it out between TS and-

Victor Dellovo: No.

Joseph Nerges: I'm just trying to understand where, how much of our managed, how much revenue in managed services do we have?

Victor Dellovo: I'm just trying to understand where, how much of our managed, how much revenue in managed services do we have?

Speaker #6: A lot. Yeah. It's a good portion of it. I don't have that number right in front, but it's the majority.

Victor Dellovo: A lot. Yeah, it's a good portion of it, which I don't have that number right in front, but it's the majority.

Speaker #7: Okay, so the majority of the $5.3 million would be the managed services portion of it, okay? All right. Let me get past the accounting here.

Joseph Nerges: Okay, so, the majority of the $5.3 million would be the managed services portion of it. Okay. All right, let me get past the accounting here. Let's talk about the Acronis just for a second. I noted that from the Acronis website, they changed their, we're gonna be rolled into Acronis Cyber Protect. That's gonna be their product, I understand. Is that correct? In other words, when we-

Victor Dellovo: Okay, so, the majority of the $5.3 million would be the managed services portion of it. Okay. All right, let me get past the accounting here. Let's talk about the Acronis just for a second. I noted that from the Acronis website, they changed their, we're gonna be rolled into Acronis Cyber Protect. That's gonna be their product, I understand. Is that correct? In other words, when we-

Speaker #7: Let's talk about Acronis just for a second. I noted that from the Acronis website, they mentioned they're going to be rolled into Acronis Cyber Protect.

Speaker #7: That's going to be their product I understand. Is that correct? In other words, when we.

Victor Dellovo: It'll be into not just the Cyber Protect; it'll be overall. It'll be on the front GUI. So, like, even when they potentially want to do a backup, if the customer chooses, they can run our product to look at all the data and all the applications, making sure there's no issues before they back up the data.

Speaker #6: It'll be into not just a cyber protect. It'll be over all it'll be on the front GUI. So even when they potentially want to do a backup, if the customer chooses, they can run our product to look at all the data and all the applications, making sure there's no issues before they back up the data.

Speaker #7: Okay. So previously, they had a product called Acronis Cyber Backup. Now they've changed the name to Acronis Cyber Protect. That's, as I understand, where we'll be rolled into.

Joseph Nerges: Okay, so, you know, previously, they had a product called Acronis Cyber Backup. Now, they've changed the name to Acronis Cyber Protect. That's, as I understand, where we'll be rolled into. So we-- and are we not selling Acronis Cyber Backup? Haven't we sold that in our TS division? We have customers that are utilizing Acronis down there, haven't we?

Victor Dellovo: Okay, so, you know, previously, they had a product called Acronis Cyber Backup. Now, they've changed the name to Acronis Cyber Protect. That's, as I understand, where we'll be rolled into. So we-- and are we not selling Acronis Cyber Backup? Haven't we sold that in our TS division? We have customers that are utilizing Acronis down there, haven't we?

Speaker #7: So and are we not selling acronis cyber backup? Haven't we sold that in our TS division? We have customers that are utilizing acronis down there.

Speaker #7: Haven't we?

Speaker #6: Yeah. Correct.

Victor Dellovo: Yeah, correct.

Speaker #7: So theoretically, we can increase our AZT sales force by incorporating our sales team in Florida who sell the acronis backup service which would now include AZT.

Joseph Nerges: So theoretically, we can increase our AZT sales force by incorporating our sales team in Florida, who sell the Acronis backup service, which could now include AZT. You understand my question there?

Victor Dellovo: So theoretically, we can increase our AZT sales force by incorporating our sales team in Florida, who sell the Acronis backup service, which could now include AZT. You understand my question there?

Speaker #7: Do you understand my question there?

Victor Dellovo: It's not really, it's a statement. Yes, in the-

Speaker #6: It's not really. It's a statement. Yes. And.

Speaker #7: We're expanding the capability of the backup service for the possibility of adding AZT to it.

Joseph Nerges: We're expanding the capability of the backup service for the possibility of adding AZT to it.

Victor Dellovo: We're expanding the capability of the backup service for the possibility of adding AZT to it.

Speaker #6: Correct.

Victor Dellovo: Correct.

Joseph Nerges: Since we have customers, I assume, 'cause we've been representing-

Speaker #7: And since we have customers, I assume, because we've been representing acronis for a number of years, in our TS division, we must have a number of customers out there just in our division that have acronis that are utilizing the backup service.

Victor Dellovo: Since we have customers, I assume, 'cause we've been representing-

Victor Dellovo: We have some.

Joseph Nerges: ... Acronis for a number of years in our TS division, we must have a number of customers out there, just in our division, that have Acronis, that are utilizing the backup service solely.

Victor Dellovo: ... Acronis for a number of years in our TS division, we must have a number of customers out there, just in our division, that have Acronis, that are utilizing the backup service solely.

Speaker #7: Solely. Okay. So in effect, we our sales team in Florida can expand the backup service to include AZT for those customers that want to have that protection.

Victor Dellovo: Mm-hmm.

Joseph Nerges: Okay, so in effect, our sales team in Florida can expand the backup service to include AZT for those customers that wanna have that protection.

Victor Dellovo: Okay, so in effect, our sales team in Florida can expand the backup service to include AZT for those customers that wanna have that protection.

Speaker #6: Yeah. If we're doing backup for a customer, you have to understand not all customers would do backup for it. There are a few that we do.

Victor Dellovo: Yeah, if we're doing backup for a customer. You have to understand, not all customers we do backup for. There are a few that we do.

Speaker #7: Well, okay. But whatever few we do could now utilize the AZT add-in, if they so choose.

Joseph Nerges: Well, okay, I'm good. But one of the few we do can now utilize the AZT add-in, if they so choose.

Victor Dellovo: Well, okay, I'm good. But one of the few we do can now utilize the AZT add-in, if they so choose.

Victor Dellovo: Yeah, if they choose to, if they choose to spend the money, yes.

Speaker #6: Yeah. If they choose to if they choose to spend the money, yes.

Speaker #7: Yes, okay. I'll let somebody else jump in. I don't want to dominate the whole thing, but I'll come back if we have another question after other people have a chance to ask questions.

Joseph Nerges: Yeah. Okay. I'll let somebody else jump in. You know, I don't want to dominate the whole thing, but I'll come back and put another question after other people have a chance to ask questions.

Victor Dellovo: Yeah. Okay. I'll let somebody else jump in. You know, I don't want to dominate the whole thing, but I'll come back and put another question after other people have a chance to ask questions.

Speaker #6: Okay. Thanks.

Victor Dellovo: Okay.

Speaker #7: Here, Joe.

Mike Price: Thanks, Joe. Bye.

Victor Dellovo: Thanks, Joe. Bye.

Speaker #7: Thanks, Joe.

Michael Polyviou: Thanks, Joe.

Speaker #1: Your next question is from Mike Price, a shareholder.

Operator: Your next question is from Mike Price, a shareholder.

Speaker #8: Good morning. Good morning. Thanks for taking my calls. My questions. With AZT being embedded in the acronis offering, there should be some predictability. Can you give us an idea of how that translates into revenue?

Mike Price: Good morning. Good morning. Thanks for taking my calls, my questions. With AZT being embedded in the Acronis offering, there should be some predictability. Can you give us an idea of how that translates into revenue? I mean, at some point, it would be nice to have this quantified.

[Analyst 1]: Good morning. Good morning. Thanks for taking my calls, my questions. With AZT being embedded in the Acronis offering, there should be some predictability. Can you give us an idea of how that translates into revenue? I mean, at some point, it would be nice to have this quantified.

Speaker #8: I mean, at some point, it would be nice to have this quantified.

Speaker #6: Yeah. We haven't even fully integrated. We're building the APIs. So how that rolls out, Mike, if we ever get that out there that we have some outlook on that, I'll include it.

Victor Dellovo: Yeah. We haven't even fully integrated. We're building the API, so how that rolls out, Mike, if we ever get that out there, that we have some outlook on that, I'll include it. But at this stage, it's way too early.

Speaker #6: But at this stage, it's way too early.

Speaker #8: And how far out do you think that might be till you give us some idea of a dollar amount?

Mike Price: And how far out do you think that might be till you give us some idea of a dollar amount?

[Analyst 1]: And how far out do you think that might be till you give us some idea of a dollar amount?

Victor Dellovo: No idea, Mike. I'm not gonna guess at this stage. Right now, I'm concentrating on getting the integration finished.

Speaker #6: I have no idea, Mike. I'm not going to guess at this stage. Right now, I'm concentrating on getting the integration finished.

Victor Dellovo: No idea, Mike. I'm not gonna guess at this stage. Right now, I'm concentrating on getting the integration finished.

Speaker #8: Okay. And also, it's been five months because the blackout period that you've been able to repurchase shares. Is that in the plans with $100 million market cap and the stock within hailing distance of the 12-month low?

Mike Price: Okay. And also, it's been 5 months because of the blackout period that you've been able to repurchase shares. Is that in the plans with, you know, a $100 million market cap and the stock within hailing distance of the 12-month low?

[Analyst 1]: Okay. And also, it's been 5 months because of the blackout period that you've been able to repurchase shares. Is that in the plans with, you know, a $100 million market cap and the stock within hailing distance of the 12-month low?

Speaker #6: Yeah. It's always been part of that. Yeah. We've been unfortunately locked out for a while. It'll open up in the next 48 hours, and we'll do something this quarter.

Victor Dellovo: Yeah, it's always been part of that. Yeah, we've been, we've been, you know, unfortunately locked out for a, for a while. It'll open up in the next 48 hours, and we'll, we'll do something this quarter. Yeah, we'll be doing something this quarter.

Speaker #6: Yeah. We'll be doing something this quarter.

Speaker #8: Okay. And a statement along with that, it would sure show a lot of confidence if the insiders, other than Joe Nurgis, were buying shares also.

Mike Price: Okay, and a statement along with that, it would sure show a lot of confidence if the insiders, other than Joseph Nergis, you know, were buying shares also. Just a statement.

[Analyst 1]: Okay, and a statement along with that, it would sure show a lot of confidence if the insiders, other than Joseph Nergis, you know, were buying shares also. Just a statement.

Speaker #8: Just a statement.

Speaker #6: Yeah.

Victor Dellovo: Yeah.

Speaker #8: Okay. Thank you.

Mike Price: Okay. Thank you.

Victor Dellovo: Okay. Thank you.

Speaker #6: Thanks, Mike.

Victor Dellovo: Thanks, Mike.

Speaker #1: Your next question for today is from Brett Davidson, a private investor.

Operator: Your next question for today is from Brett Davidson, a private investor.

Speaker #9: Good morning, gentlemen.

Brett Davidson: Good morning, gentlemen.

[Analyst 2]: Good morning, gentlemen.

Speaker #10: Good morning to you.

Victor Dellovo: Morning, you.

Michael Polyviou: Morning.

Brett Davidson: Just got a few quick things. Gary, I think you were talking about the repayments on the financing, the $3 million.

Speaker #9: Just got a few quick things. Gary, I think you were talking about the repayments on the financing, the $3 million. So are we, yeah.

[Analyst 2]: Just got a few quick things. Gary, I think you were talking about the repayments on the financing, the $3 million.

Joseph Nerges: The interest, yeah.

Gary Levine: The interest, yeah.

Brett Davidson: Are we-- Yeah, are we still... So we're gonna collect $3 million. That, that number on the balance sheet, could conceivably drop, but are we, are we still acting in that, in that financing role? Is it gonna drop on the balance sheet, or it's just cycling through to another customer or, or whatever?

[Analyst 2]: Are we-- Yeah, are we still... So we're gonna collect $3 million. That, that number on the balance sheet, could conceivably drop, but are we, are we still acting in that, in that financing role? Is it gonna drop on the balance sheet, or it's just cycling through to another customer or, or whatever?

Speaker #9: Are we still so we're going to collect 3 million. That number on the balance sheet could conceivably drop, but are we still acting in that financing role?

Speaker #9: Is it going to drop on the balance sheet, or it's just cycling through to another customer or whatever?

Speaker #6: It could, right? It could. Yeah. It just every customer is a little different. But those are the ones that we've already paid out, paid for the product, and now we'll be collecting.

Victor Dellovo: It could, Brett.

Joseph Nerges: Yeah.

Victor Dellovo: Yeah.

Victor Dellovo: It could, yeah. It just... Every customer is a little different, but those are the ones that we've already, you know, paid out, you know, paid for the product, and now we're, we'll be collecting. So sometimes we're taking three-year deals for the customer, and, you know, the payment structure for all deals are a little different.

Speaker #6: So sometimes we're taking three-year deals for the customer, and the payment structure for all deals are a little different.

Brett Davidson: Okay, so we're still in that business. Just wanted to—

Speaker #9: Okay, so we're still in that business. Just wanted to.

[Analyst 2]: Okay, so we're still in that business. Just wanted to—

Speaker #6: Yeah. We're offering it to customers that are high-quality customers, and it keeps us sticky inside the organization. And it's a good use of our cash.

Victor Dellovo: Yeah, it-

Brett Davidson: Confirm it.

Victor Dellovo: Confirm it.

Victor Dellovo: We're all with, you know, we're offering it to customers that are high-quality customers, and it keeps us sticky inside the organization. And it's a good use of our cash.

Speaker #9: Yeah, you got your clause in them. So the permission on the second and third sites—I'm just interested in when that occurred.

Brett Davidson: ... Yeah, you, you got your claws on them.

[Analyst 2]: ... Yeah, you, you got your claws on them.

Victor Dellovo: Mm-hmm. Yep.

Victor Dellovo: Yep.

Brett Davidson: So the permission on the second and third sites, I'm just interested in kind of when that occurred. Are we talking about just in the first quarter, or is that continued, or excuse me, in the prior quarter, or is that continuing to the current quarter, some of those second, third sites?

[Analyst 2]: So the permission on the second and third sites, I'm just interested in kind of when that occurred. Are we talking about just in the first quarter, or is that continued, or excuse me, in the prior quarter, or is that continuing to the current quarter, some of those second, third sites?

Speaker #9: Are we talking about just in the first quarter, or is that continued—or, excuse me—in the prior quarter, or is that continuing into the current quarter, some of those second, third sites?

Victor Dellovo: The ones that have multi-site, there's two variations, right? The ones that we deal with corporate, and then, you know, if they have 50 locations, like we did with one of our large pharmaceuticals, they bought it from the corporate level, and we pushed it out to those 40+. You know, some cases, all the budgets are separated, so we have to go to, you know, one of the ones I mentioned was that steel company. We have to go to all 20-some-odd sites, and we already got the third site. You know, one came in last quarter, one came in this quarter. There's another one in the food industry that we got the second one. Another one in another industry came in actually yesterday for the third site.

Speaker #6: The ones that have multi-site, there's two variations, right? The ones that we deal with corporate and then if they have 50 locations like we did with one of our log pharmaceuticals, they bought it from the corporate level, and we pushed it out to those 40-plus.

Speaker #6: And, in some cases, all the budgets are separated. So we have to go to one of the ones I mentioned was at the steel company.

Speaker #6: We have to go to all 20-some-odd sites, and we already got the third site. One came in last quarter, one came in this quarter.

Speaker #6: There's another one in the food industry that we got the second one. Another one in another industry came in actually yesterday for the third site.

Speaker #6: So yeah, unfortunately, it would be nice if we could just deal with corporate, take one purchase order, and push it all out. In some cases, that's not the case, and we have to go to every individual site, and it gets easier after the first one, because for the POs we don't have to do another POC.

Victor Dellovo: So yeah, unfortunately, it would be nice if we could just deal with corporate, take one purchase order, and push it all out. In some cases, that's not the case, and we have to go to every individual site. And it gets easier after the first one because the PO. We don't have to do another POC, we just have to go get budget money from them. And as I mentioned, you know, earlier in the script, that every customer's purchasing process is a little different, so we have to kind of abide on how things, you know, how each one does that. And sometimes, unfortunately, they are very, very slow, and things take way more time than I think it should, but we're at the mercy of the customer.

Speaker #6: We just have to go get budget money from them. And as I mentioned, earlier in the script, that every customer's purchasing process is a little different.

Speaker #6: So, we have to kind of abide by how things—how each one does that. And sometimes, unfortunately, they are very, very slow, and things take way more time than I think they should.

Speaker #6: But we're at the mercy of the customer.

Brett Davidson: Well, from the description there, it sounds like this is becoming a more regular occurrence. That this is starting to happen with some kind of frequency.

Victor Dellovo: Well, from the description there, it sounds like this is becoming a more regular occurrence. That this is starting to happen with some kind of frequency.

Speaker #9: From the description there, it sounds like this is becoming a more regular occurrence. This is starting to happen with some kind of frequency.

Speaker #6: Yeah. Last year, at this time, we had two customers, right? A year later, I mentioned we have 40-something. So we are doing that where we seed the product at one location.

Victor Dellovo: Yeah. Like, last year at this time, we had 2 customers, right? A year later, you know, I mentioned we have 40-something. So, you know, we are doing that where we seed the product at one location. We try to get someone who can evangelize the difference between us and some of the competitors out there, why they should spend money with, you know, a small company like us, and how we truly do protect the endpoint and lock it down. And if we can get someone who can evangelize internally, it makes it a lot easier for the second, third, and multiple locations that they have. So yeah, it's getting easier, but it's not easy, right? Every customer is a little different, and getting to know the customers and how they do business is a lot of work.

Speaker #6: We try to get someone who can evangelize the difference between us and some of the competitors out there, why they should spend money with a small company like us, and how we truly do protect the endpoint and lock it down.

Speaker #6: And if we can get someone who can evangelize internally, it makes it a lot easier for the second, third, and multiple locations that they have.

Speaker #6: So yeah, it's getting easier, but it's not easy, right? Every customer is a little different in getting to know the customers and how they do business is a lot of work.

Speaker #6: But we are getting references.

Victor Dellovo: But, you know, we are getting references-

Brett Davidson: Yeah.

Victor Dellovo: Yeah.

Speaker #9: Yeah.

Victor Dellovo: You know, we are getting references, and the, the references are helping, right? You know, we're working on a deal right now. They're like: "Who else do you do business with locally?" And we mentioned, he's like: "Oh, I know that person. Let me call them." If they get thumbs up on ARIA AZT, you know, I don't even have to do the POC. So things like that are happening. You know, to me, it could always be faster, but things are happening in a positive direction.

Speaker #6: We are getting references, and the references are helping, right? We're working on a deal right now. They're like, "Who else do you do business with locally?" And we mentioned, he's like, "Oh, I know that person.

Speaker #6: Let me call them." If they get thumbs up on RAAZT, I don't even have to do the POC. So things like that are happening.

Speaker #6: To me, it could always be faster. But things are happening. In a positive direction.

Brett Davidson: Yeah, yeah. That's, you know, it's exactly what I'm getting at. Yeah, I, I fully get it, that, you know, this is really tough slog, but eventually... So once, I mean, if you get to the point where, you know, multiple of these relationships start to pay dividends and, you know, one guy's talking to another guy, and, I mean, do you get any feel yet of the kind of momentum where this starts to look exponential instead of linear?

Victor Dellovo: Yeah, yeah. That's, you know, it's exactly what I'm getting at. Yeah, I, I fully get it, that, you know, this is really tough slog, but eventually... So once, I mean, if you get to the point where, you know, multiple of these relationships start to pay dividends and, you know, one guy's talking to another guy, and, I mean, do you get any feel yet of the kind of momentum where this starts to look exponential instead of linear?

Speaker #9: Yeah. That's exactly what I'm getting at. Yeah. I fully get it that this is really tough slog, but eventually, so once I mean, you get to the point where multiple of these relationships start to pay dividends, and one guy's talking to another guy, and I mean, do you get any feel yet of the kind of momentum where this starts to look exponential instead of linear?

Victor Dellovo: Um.

Speaker #9: Or still too early?

Brett Davidson: Or still too early?

Victor Dellovo: Or still too early?

Speaker #6: Still a little too early, right? We're gathering the data. It's getting a little easier to connect dots, but it's still like I said, it's only been truly a year of really, really pushing this product and kind of figuring out the messaging.

Victor Dellovo: Still a little too early, right? You know, we're, we're gathering the data. It's getting a little easier-

Brett Davidson: Yeah

Victor Dellovo: ... to connect the dots, but it's still, you know, like I said, it's only been truly a year of really, really pushing this product and kind of figuring out the messaging. And, you know, every industry is a little different. So, you know, building those, you know, like I had mentioned on the script there, that we're putting, you know, these one-pagers together that represent the industry, to try to make it a little easier to understand how we can help them. You know, and why we're a little different than the competitors, where we fit in with those competitors, right? Sometimes we can go alongside of those competitors. You know, they can do the IT side of it, while we do the OT side of it, right?

Victor Dellovo: Yeah

Speaker #6: And every industry is a little different. So building those like I had mentioned on the script there that we're putting these one pages together that represent the industry to try to make it a little easier to understand how we can help them.

Speaker #6: And why we're a little different than the competitors. Where we fit in with those competitors, right? Sometimes we can go alongside of those competitors.

Speaker #6: They can do the IT side of it while we do the OT side of it, right? And how we can join all the logs on the one interface.

Victor Dellovo: You know, how we can join, you know, all the logs on the, you know, one interface. Those are the messages that we kind of put together over the last year to try to make it a little cleaner, clearer to the customer. Everything to speed up the sales process.

Speaker #6: So those are the messages that we kind of put together over the last year to try to make it a little cleaner, clearer to the customer.

Speaker #6: Everything to speed up the sales process.

Speaker #9: So it sounds like the beginning signs are there, but it just hasn't fully mushroomed yet. But well, I commend you for the hard work, and moving this forward.

Brett Davidson: So it sounds like the beginning signs are there, but it just hasn't fully mushroomed yet. But, well-

[Analyst 2]: So it sounds like the beginning signs are there, but it just hasn't fully mushroomed yet. But, well-

Victor Dellovo: Yeah

Brett Davidson: ... I commend you for the hard work and moving this forward, and I'll try and be patient.

[Analyst 2]: ... I commend you for the hard work and moving this forward, and I'll try and be patient.

Speaker #9: And I'll try and be patient.

Speaker #6: Yeah. Yeah. We're moving as fast as we can. I promise you that. You should know me I'm not a patient person, so.

Victor Dellovo: Yeah. Yeah. We're moving as fast as we can, I promise you that. You should know me, you know, I'm not a patient person, so.

Speaker #9: Okay. All right. Well, thanks for taking my questions.

Brett Davidson: All right. Well, thanks for taking my questions.

[Analyst 2]: All right. Well, thanks for taking my questions.

Speaker #6: Thanks, Brett.

Victor Dellovo: Thanks, Brett.

Speaker #1: As a reminder, if you would like to ask a question, please press star one. Your next question is a follow-up question from Joseph Nurgis.

Operator: As a reminder, if you would like to ask a question, please press star one. Your next question is a follow-up question from Joseph Nergis. Your line is live.

Speaker #1: Your line is live.

Speaker #10: Okay. I'm back on again. Okay. I just have a little clarification. You elaborated on the expansion of our marketing and managed services. And I'm trying to get the numbers.

Joseph Nerges: Okay, I'm back on again. Okay, I just a little clarification. You elaborated on the expansion of our marketing and managed services, and-

Joseph Nerges: ... I'm trying to get the numbers. I heard them once, and I think we heard them through a repeat again, where you said that we're adding some new customers in managed services. Did you say that you thought they'd be monthly revenues going forward of $100,000? I'm trying to get the numbers that you gave in the

Speaker #10: I heard them once, and I think we heard them through a repeat. Again, where you said that we're adding some services. Did you say that you thought they'd be monthly revenues going forward of 100,000?

Speaker #10: I'm trying to get the numbers that you gave in the.

Speaker #6: Joe, we had a really good we closed some nice deals. So a little clarity. When you close an MSP deal, right, it takes various time to get them set up and actually start billing them.

Victor Dellovo: Joe, we had a really good... We closed some nice deals. So, a little clarity. When you close an MSP deal, right, it takes various time to get them set up and actually start billing them.

Joseph Nerges: Okay.

Victor Dellovo: Okay.

Victor Dellovo: Over the last, we closed before the end of last year, we closed some nice deals. It took us a little time to get those up and running, and as of last quarter, we are starting to build net close to $100,000, a little less than $100,000 additional per month of net new revenue for the MSP. That's net new revenue.

Speaker #6: Over the last—well, we closed some before the end of last year. We closed some nice deals. It took us a little time to get those up and running.

Speaker #6: And as of last quarter, we are starting to bill net close to 100,000, a little less than 100,000 additional per month of net new revenue for the MSP.

Speaker #6: That's net new revenue.

Joseph Nerges: That's, that's extremely good. That's what I thought you said, and I'm... And that, that's a total of all the customers you've added in other,

Speaker #10: That's extremely good. That's what I thought you said, and that's a total—all the customers you've added. In other words.

Speaker #6: Yeah. Yeah. Those are the yeah. Just for the additional increase for per month.

Victor Dellovo: Yeah, yeah. Those are the... Yeah, just for the additional increase per month.

Joseph Nerges: Okay. All right. Well, great. Thank you. That's that clarification. I thought that's what you said, but I just wanted to make sure that the numbers were added up to what I was thinking of. Thanks a lot. Thanks again, guys.

Speaker #10: All right. Well, great. Thank you. That clarification, I thought that's what you said, but I just wanted to make sure that that was the numbers were added up to what I was thinking of.

Speaker #10: Thanks a lot. Thanks again, guys.

Speaker #6: Yeah. No problem, Joe.

Victor Dellovo: Yeah, no problem, Joe.

Operator: We have reached the end of the question and answer session, and I will now turn the call over to Victor for closing remarks.

Speaker #1: We have reached the end of the question-and-answer session, and I will now turn the call over to Victor for closing remarks.

Speaker #6: Thank you, everyone, for joining us today. As I mentioned at the top of the today's call, we made progress on all fronts during the first quarter, and aggressively pursuing our opportunities for the remainder of fiscal 2026, both on the services side of the business as well as the AZT Protect.

Victor Dellovo: Thank you, everyone, for joining us today. As I mentioned at the top of today's call, we made progress on all fronts during Q1 and are aggressively pursuing our opportunities for the remainder of fiscal 2026, both on the services side of the business as well as AZT PROTECT. We look forward to reporting on our progress with you in May. In the meantime, thank you to our shareholders for their support, to our team, for the dedication and effort, and we wish everyone a good remainder of the day. Goodbye for now.

Speaker #6: And we look forward to reporting on our progress with you in May. In the meantime, thank you to our shareholders for their support, to our team for the dedication and effort, and we wish everyone a good remainder of the day.

Speaker #6: Goodbye for now.

Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Q1 2026 CSP Inc Earnings Call

Request a DemoDemo

CSPI

CSP

Earnings